Bills were introduced Friday in the Kansas house and senate to phase out corporate income tax.
Rep. Gene Suellentrop of Wichita and Sen. Terry Bruce of Hutchinson introduced the bills in their chambers that call for, beginning in July, a 20 percent reduction in Kansas corporate income tax each year for the next five years.
Proponents of the bills say the elimination of corporate income tax will increase tax receipts because the absences of such a tax will lead companies from outside the state to expand or relocate here, which in turn will create more jobs — i.e. taxpayers — and stimulate other tax revenue.
"This legislation is a critical step towards getting Kansans back to work," Wichita Metro Chamber of Commerce CEO Bryan Derreberry said in a news release. "For too long, Kansas workers have been sidelined due to us losing the battle of competition with other American states. The elimination of the corporate income tax is clearly a game changer."
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But the bill comes at a time when the state is facing a $550 million budget shortfall, cuts to spending on public education and elimination of some state agencies.
Ken Ciboski, a political science professor at Wichita State University, questions the timing of the bill. He said legislators might consider crafting more economic stability before moving on the corporate income tax.
"At this time, I find the idea a little bit iffy," Ciboski said. "If we get the budget deficit in order and the economy begins to recover, if we get more jobs, then maybe that's when you look at it. They need to come up with what they're going to do for revenue to offset the cut. If they can't, then there's no business cutting taxes at this time."
Kansas collected $244 million in corporate income tax in the 2010 fiscal year.
Jason Watkins, the chamber's lobbyist, said the absence of the tax in Kansas will make the state stand out when competing against other states for corporate expansions and relocations.
"We can't just stand there and say, 'Come to Kansas,' because everybody's doing that," Watkins said.
Watkins said that in addition to tax revenue increasing from more jobs, sales and property tax coffers would grow from companies expanding and constructing buildings and buying equipment.
If the legislation passes, it would make Kansas one of the few states to not have a corporate income tax. According to the Tax Foundation, a nonpartisan tax research group based in Washington, D.C., all but five states — Nevada, South Dakota, Texas, Washington and Wyoming — have corporate income tax.