(Will be updated as warranted)
Running out of time and short on votes, Republican leadership on Tuesday morning explained why it scrapped a proposed flat tax for a new dual income tax rate.
Meeting with reporters, House Speaker Dan Hawkins and his leadership team laid out the new Republican tax bill that was introduced in a committee late Monday afternoon.
A hearing is set for Wednesday, and it could reach the House floor by early next week.
The plan reduces the state’s three tax rates to two and trims them by a half percent. It’s an alternative to the single rate plan adopted by the Senate last week with a supermajority.
“I am probably the most steadfast person on wanting a single rate tax,” Hawkins said.
“This whole year, we worked toward that direction,” he said. “But you can only do what you have votes for. And it became very evident that we’re not going to get to an override vote.”
Hawkins said little has changed since last month when the Kansas House came up short of overriding Gov. Laura Kelly’s veto of a tax plan that would have moved the state to a single rate tax structure.
The House voted 81-42 to override the veto, three votes short of the 84 needed to overcome the veto after Republicans lost support from five conservative and moderate lawmakers who voted against the override.
Hawkins said he had been talking to members about what it would take to reach 84 in support of a single rate tax.
“No matter what we did, we still didn’t get to 84,” Hawkins said.
Hawkins said the governor wasn’t going to retreat in her opposition to single tax rate, and the speaker said he feared the session would end before anything it could get done.
There are now just short of three weeks left in this year’s legislative session.
“It is very important that we get a tax relief package done,” he said. “It’s important to us, but it’s more important to the citizens of the state.
“At some point in time, you have to give up maybe what you want and move to what you can get passed.”
Hawkins acknowledged that he had been in touch with Republican leaders in the Senate, which had just passed a flat tax a week earlier.
“To say that the Senate was happy, that would be wrong,” Hawkins said.
“There’s certainly some people that are not happy about that,” he said.
“I can keep trying to do a single rate and I can keep getting the same thing and then I’ve run out of time,” he said.
A spokesman for Senate President Ty Masterson declined to comment on the House bill. And the governor’s office did not immediately comment.
House Minority Leader Vic Miller said he was still evaluating the new tax proposal and wasn’t ready to immediately comment.
On Monday night, Democratic state Rep. Tom Sawyer, the ranking member on the House tax committee, was upbeat about the new tax legislation.
“It’s a good start. It’s not a bad bill,” Sawyer said in an interview. “It’s a promising bill.”
Sawyer said he objected to a provision that would eliminate the local ad valorem tax reduction fund.
The so-called LAVTR fund has been used in the past to send money to local governments to lower property taxes. The Legislature hasn’t put any money into the fund in 20 years.
Sawyer said he would have preferred the new House bill to include a plan to accelerate elimination of the state’s sales tax on food – something that was left out partially to control the cost of the tax bill.
The new House bill would collapse the state’s three-rate structure to two rates, the top two of which are currently at 5.7% and 5.25%. It would eliminate the bottom rate of 3.1%.
The House plan would cut the top personal individual income tax to 5.65% and the smaller bracket to 5.2%.
The first $7,000 for a single filer’s tax rate would not be taxed. The first $14,000 for a married couple filing jointly also would not be taxed.
The plan would also increase the standard deduction across the board:
- Increasing to $3,605 from $3,500 for single filers
- Increasing to $6,180 from $6,000 for head of household
- And increasing to $8,240 from $8,000 for married couples filing jointly.
The new House plan would phase out state income taxes on Social Security over four years.
It also would increase the personal income tax exemption to $2,320 from $2,250.
The bill also would lower the state’s 20-mill tax property tax levy for schools to 18 mills while repealing the local ad valorem tax reduction fund.
The money for schools would be replenished from the state general fund.
The Senate plan collapses the state’s three tax rates down to one, which would gradually decrease a half percent a year from 5.7% in 2024 to 5.45% in 2029.
It also would increase the personal exemption to $22,000 for a married couple filing jointly from $2,250 for a single person.
The exemption would rise to $11,000 for all other filers. Additionally, filers could claim a $3,000 personal exemption for each dependent.
The bill also would exempt all Social Security income from state taxes and increase the property tax exemption for the 20-mill school tax to $100,000 from about $42,000.
It also would increase the standard deduction for individuals to $4,000 from $3,500 with everyone getting a yearly cost-of-living adjustment starting in 2025.
