Wagle says Senate wants to make taxes more fair

State Senate President Susan Wagle said Friday that the Republican majority is committed to a tax system that is more fair for workers, but she is not ready to commit to a particular course.

Wagle, R-Wichita, would not say where she will personally stand on the repeal of a 2012 law that eliminated income taxes on business owners’ income from limited liability companies, real estate rental, farms and closely held corporations organized under Subchapter S of the federal tax code.

But she said Republicans knocking on doors to campaign have received a clear message from working Kansans who don’t think it’s fair that they have to pay income taxes while others don’t.

She said she agrees with the principle that people doing the same kind of work should be taxed equally, whether their income comes via salary or freelance payment. And she said she thinks most of the incoming senators agree.

“There’s going to be a lot of tax bills, a lot of solutions, and we are out of money, and all bills are on the table,” Wagle said. “And the principle we’re going to follow is low rates, broad-based, fair. And when we talk about fair, that means fair.”

She referred to the business exemption as a “loophole” in the tax code and said lawmakers’ original intent was that business owners would have to declare some of their profits as personal salary and pay taxes on that money. However, she said the implementation of the law has been a problem because it allows the business owners to exempt all of their income.

Wagle made her comments in a meeting with The Eagle’s editorial board.

She predicted the upcoming session will be a long one as lawmakers try to reach consensus on taxation and also have to craft a new school-finance formula under the eyes of the Kansas Supreme Court.

Between senators retiring and gains made by moderate Republicans in the August primary election, Wagle will face a more ideologically diverse caucus than the highly conservative group that has dominated the Senate the past four years.

“I have members of my Senate right now who want to repeal the 2012 (tax plan) and fix the loophole,” she said. “I have senators who don’t want to do a darn thing and think we can grow our way out of this.”

State general fund revenue peaked in 2012 at approximately $6.4 billion. Last year’s revenue was about $6.2 billion, and the state has fallen more than $60 million behind the projected revenue for the current fiscal year.

Wagle also said Senate Republicans want the Legislature to take a stronger role in managing the state budget.

She said she plans to work with the incoming House speaker, who hasn’t been selected, to build a legislative staff to prepare an annual budget proposal that would be independent of the governor’s office.

At present, the governor’s office develops the draft budget on its own, and lawmakers use that as the starting point for their deliberations on where to cut or expand spending.

This story was originally published October 7, 2016 at 4:43 PM with the headline "Wagle says Senate wants to make taxes more fair."