A handful of senators are crafting a new flat tax plan as the Legislature remains stuck over how to solve the state’s budget shortfall, but the proposal faces long odds because of opposition from politically moderate Republicans.
Lawmakers have been back in the Statehouse for one week, but neither the House nor the Senate has debated legislation to increase taxes. Each chamber came close to debating plans but pulled back, sometimes at the last minute.
After House Republican leaders called off a debate on Wednesday, attention shifted to the Senate. The Senate Tax Committee met Thursday and Friday in an effort to put together a bill that would tax personal income at a single rate.
The committee will meet again on Monday, and discussions have centered on a plan that would tax personal income at 4.4 percent. Currently, individuals earning less than $15,000 or married couples earning less than $30,000 pay 2.7 percent. Everyone else pays 4.6 percent.
Under the plan, those with incomes of $6,300 or less would be exempt from taxes for single filers. The level for joint filers would be $12,600.
A flat tax would need votes from moderate Republican senators in order to pass because Democrats do not support the idea, in part because it would not generate enough money. Moderates also insist a package is needed that generates enough revenue to close the state’s budget shortfall of about $900 million over two years, probably with money left over to pay for increased school funding.
Lawmakers face a court-imposed June 30 deadline to enact a new funding system.
No official estimate exists yet for how much the plan under development in the Senate Tax Committee would raise, but a flat tax plan with a rate of 4.6 percent that was shot down by lawmakers earlier this year would have generated about $652 million in additional revenue over two years.
By contrast, the plan the House nearly debated this week would have raised more than $1 billion over the same time.
Under the House plan, married people filing jointly with income between $30,001 and $100,000 would be taxed at 5.25 percent, up from 4.6 percent. The top rate, for income above $100,000, would be taxed at 5.6 percent, also up from 4.6 percent. The tax rate for the bottom bracket would go to 3 percent from 2.7 percent.
Sen. Dinah Sykes, R-Lenexa, said she didn’t see moderate Republicans supporting a flat tax.
“I don’t see any way that they do (get us to vote yes),” she said. “But is it impossible? They’re going to try to find pet projects, anything to try to sway people, and we’re trying to stay together for a comprehensive, structural fix.”
The elections last year swept a number of new, more-moderate lawmakers into the Statehouse. Legislative leaders will likely need some support from first-year lawmakers, argued Sen. John Doll, R-Garden City.
“I would think they would have to have a lot of us new guys on board,” Doll said.
The Senate debated a flat tax proposal in early April and voted it down 37-3. But 15 senators supported sending the bill back to committee rather than killing it outright, suggesting the vote on the bill didn’t reflect its true level of support. Twenty-one votes are needed to pass legislation.
“You understand the definition of insanity is doing the same thing over and over and expecting a different result? Well, that’s more or less what describes this effort to pass a flat tax,” Senate Minority Leader Anthony Hensley, D-Topeka, said.
Sen. Larry Alley, R-Winfield, has been pushing for a second look at a single-rate plan. He said he believes a proposal would receive more votes now than before.
“There were some who thought that it raised too much revenue. Some thought it didn’t raise enough revenue, and some just didn’t like it because,” Alley said.
‘Things will pass’
The plans that were almost debated this week would have needed support from Democrats if they were to overcome likely vetoes from Gov. Sam Brownback. The Senate Tax Committee’s work on Thursday and Friday appeared to be going in a different direction, however, toward a plan that would be more palatable to the governor.
Brownback vetoed a bill earlier this year that would have raised about $1 billion over two years, but he came out in favor of the flat tax bill that the Senate rejected.
Although Brownback lent his support to that proposal, since then he has refrained from endorsing or criticizing specific bills. On Friday, he seemed to project zen-like calm when speaking to reporters about the Legislature’s unresolved work.
“It will happen, things will pass. It will all get dealt with, but they take time,” Brownback said.
Sen. Tom Holland of Baldwin City, the ranking Democrat on the Senate Tax Committee, questioned the committee’s direction and whether the chairwoman, Sen. Caryn Tyson, R-Parker, was working with Senate Republican leadership.
“I do not know where she’s trying to take the committee at this point and why she thinks this would somehow garner new significant support in the Senate,” Holland said.
Tyson said the committee is trying to develop a plan that senators will support.