Kansas Senate shoots down flat tax plan backed by governor

The Kansas Senate resoundingly shot down a flat tax proposal supported by Gov. Sam Brownback.

The vote reflected a gulf between the governor and the Republican-led Legislature, as well as rank-and-file Republican senators and their leadership.

Senators voted the bill down by a 37-3 margin Thursday afternoon. Only Senate President Susan Wagle, Majority Leader Jim Denning and Gene Suellentrop, R-Wichita, voted for the bill.

SB 214 would have created a single, uniform tax bracket of 4.6 percent. It would have also lowered the state sales tax on food and repealed a tax exemption for certain business owners on nonwage income.

Brownback endorsed a flat tax proposal a day earlier, saying it would address “today’s budget challenges without unnecessarily harming economic growth in Kansas.” And Senate leadership said they wanted to consider it before the Legislature left on a three-week break on Friday.

Some conservative Republicans said the bill provided the state with a better taxing structure over regressive or progressive taxing models.

“The state has no right to claim a greater ownership … in your earnings,” Suellentrop said. “The governor recognizes this is the fairest way to tax.”

But lawmakers on both sides of the aisle argued the bill would hurt low-income Kansans and would not address the state’s budget hole.

“I’m not sure that we ought to be following the governor’s advice when it comes to taxes,” said Senate Minority Leader Anthony Hensley, D-Topeka.

The plan would have raised $295 million in the 2018 fiscal year and almost $357 million in the 2019 fiscal year, according to state estimates.

The state faces a projected shortfall of more than $1 billion through June 2019.

Melika Willoughby, Brownback’s communications director, said the governor “will continue working with the Legislature on taxes and other issues when they return.”

Diverse opposition

Moderate Republicans and Democrats blasted the flat tax plan.

“We’re increasing the tax on the working poor again,” said Sen. John Doll, R-Garden City.

Sen. Tom Holland, D-Baldwin City, said the tax plan didn’t “come anywhere near addressing the revenue needs we’ve already established.”

“This introduces a whole new realm of fiscal management problems going forward,” he said. “We’re underwater and it’s getting worse.”

“It will shift the tax burden to poor people, make no mistake about it,” Holland added.

Conservative Republicans also criticized the plan because it raises taxes when they think the Legislature should focus on controlling its spending.

“This is going to be a large tax increase on everybody. Businesses. Everybody,” said Sen. Robert Olson, R-Olathe. “You're raising taxes on everybody.”

“We don’t have our act together,” he added. “I’m not going to support a tax increase until we at least look at expenditures.”

Some senators said they supported a flat tax but that they couldn’t support the plan before them.

“I will vote for a raw, flat and fair tax that solves our budget problems. But today is not quite that day,” said Sen. Ty Masterson, R-Andover. “And this vote tells you absolutely nothing.”

A ‘viable alternative’

The bill was a product of the Senate’s tax committee, chaired by Sen. Caryn Tyson, R-Parker.

Tyson noted some lawmakers thought the bill raised taxes too high and others thought it didn’t raise them enough.

“So it sounds like, to me, it might be right in the middle,” she said, before eventually voting the bill down.

Wagle, R-Wichita, said legislative leaders saw “tremendous movement” from the governor when he said he would sign a flat tax proposal.

“This is a viable alternative in the situation we’re in,” she said in a Republican caucus meeting earlier in the day.

Sen. Larry Alley, R-Winfield, asked to send the bill back to committee, where it would stay alive. But that motion failed by a 15-25 margin.

An ‘exercise in futility’

Sen. Mary Pilcher-Cook, R-Shawnee, proposed cutting the sales tax on food to zero in debate during the morning.

The move would have cost the state about $300 million in revenue.

The amendment failed. Several senators said they wanted to lower the food sales tax more but that the state could not afford to do so.

“We’re not in a place where we can do this,” said Sen. Julia Lynn, R-Olathe. “We don’t have any way to pay for it. And if nothing else changes, we get to raise taxes even more.”

Hensley said the Senate was engaged in an “exercise in futility here.”

“I think this bill is going to die,” he said. “So the question is, do you want to kill it quickly?”

This story was originally published April 6, 2017 at 12:02 PM with the headline "Kansas Senate shoots down flat tax plan backed by governor."