TOPEKA – Increasing the state sales tax and rolling back the zero tax rate for certain types of business emerged as the leading ideas in a survey of Kansas House Republicans released Monday morning.
But the House remained divided over how much to nibble into the total tax exemption for pass-through businesses, which include all limited liability companies, sole proprietorships and corporations organized under Subchapter S of the federal tax code.
The survey was designed to test the temperature of the GOP members on what, if any, tax increases they would support as the Legislature seeks a way to exit more than a month of gridlock and balance a state budget that’s currently $400 million short.
It will take 63 votes to pass a tax plan in the House and it’s primarily a Republican task in the GOP-dominated Legislature.
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The survey was taken during a rare Sunday legislative day.
Forty-three House members said they would vote for raising the sales tax from 6.15 percent to 6.5. Support fell off for higher tax rates: 25 votes for 6.55 percent, 19 votes for 6.6 and 20 votes for 6.65.
Seventeen representatives skipped the question.
Results were murkier when it came to possibly restoring taxes on owners of LLCs and Subchapter S companies.
Thirty-five representatives supported setting a tax on those business owners’ income at 2.7 percent, the same tax rate paid by the poorest Kansans. Another seven said they would go for 1 percent. Nine said “absolutely no.”
The governor’s plan to tax guaranteed payments to partners in the zero-tax businesses gained support of 25 representatives; 36 voted “no.”
House tax chairman Marvin Kleeb, R-Overland Park, said he thinks the survey generated some useful information. He said he sees House Republicans as being split among four basic factions:
▪ Members on the left who are unlikely to support any tax plan unless they also get changes to the school block-grant funding bill passed earlier this year, and/or Medicaid expansion to cover uninsured Kansans who make too much for Medicaid but not enough to qualify for Affordable Care Act insurance subsidies.
▪ Members on the far right who are opposed to any tax increase without very deep budget cuts.
▪ Members who might support a plan, but not without a significant tax on the zero-tax businesses.
▪ Members who might support a plan, but oppose rolling back the business tax exemption beyond what the governor has proposed on guaranteed payments.
Kleeb said he thinks those who would support some plan are more numerous than those who would vote down any plan.
The House does not plan to act on taxes until it sees what passes the Senate, House Majority Leader Jene Vickrey, R-Louisburg, said Monday.
The Senate has been bitterly divided on tax policy. Senators debated all Sunday night, but failed to pass a plan. They’ll make another attempt Monday night.
“That’s the next step is seeing if the Senate will pass the plan and what that is and see if that’s something where maybe we can find support in the House,” Vickrey said. “Right now that appears to be the best way to pull it together as quickly as possible.”
Rep. Don Hineman, R-Dighton, called waiting on the Senate frustrating but said that he thought it was the right move. “We need to know what will be acceptable to the Senate,” he said, contending that the Senate has been the more volatile chamber on the issue.
But other House members criticized this approach.
“I cannot convey my level of disappointment in English,” said Rep. Stephanie Clayton, R-Overland Park.
“The fact that we are being held hostage to a group that last night demonstrated they are not organized and not willing to govern in a professional manner is a travesty,” she said.
The House did have an opportunity to vote on tax policy Friday but wasted it, said Rep. John Carmichael, D-Wichita. The House advanced without debate a tax bill that raises just $30 million in an effort to speed up negotiations with the Senate.
“When we voted on Friday to not debate a tax bill on the floor of the House of Representatives, we essentially turned over those determinations to the Senate,” said Carmichael, who was one of the only lawmakers in the 125-member House to oppose a measure to cut off debate.
“I hear from my constituents every day that they want me to do something to restore fairness to taxes in Kansas and it is very disappointing that it appears I may have no input whatsoever in the process,” he said.