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March 21, 2013

House approves bill to channel future state revenue growth to income tax cuts

The Kansas House voted 82-39 Thursday in favor of a bill that channels any growth in state government revenue beyond 2 percent toward income tax cuts.

The Kansas House voted 82-39 Thursday in favor of a bill that channels any growth in state government revenue beyond 2 percent toward income tax cuts.

It’s a follow-up to the elimination of income taxes for 191,000 businesses and farms and lower rates for individuals signed into law by Gov. Sam Brownback in 2012.

House Republican leaders initially sought to divert about $382 million in sales tax money from a long-term highway improvement plan to the state’s general fund to mitigate deep cuts in state services caused by the tax cuts. But that was swiftly jettisoned during a debate and initial vote Wednesday.

Without the highway money, the House GOP tax plan could tank the state’s budget in a year or two, forcing cuts to state services. But leaders say they expect to reach a compromise with Senate Republicans who last week approved their own set of tax cuts.

Both the House and Senate bills would reduce the value of income tax deductions over the next few years as income tax rates decline.

Negotiators from both chambers are likely to debate a compromise in coming weeks.

Democrats decried the bill and called it a $392 million tax increase because it pushes down the value of deductions, such as the popular mortgage tax deduction.

Learn more about Wednesday’s House debate and the two tax reduction plans here.

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