It would take 423,175 new jobs in Kansas in 18 months to generate enough sales and income tax revenue to cover the $829 million projected cost of a major tax reform bill approved by the Senate, according to numbers released by legislative researchers.
Those jobs would have to average $34,000 a year.
Rep. Nile Dillmore, D-Wichita, presented those figures Wednesday as part of negotiations between three House members and three senators on tax reform plans.
Dillmore said anything short of those 423,175 jobs would require the state to find money elsewhere to pay for the income tax breaks created under a heavily altered version of Gov. Sam Brownback’s tax reform plan.
But Republicans countered that tax reform is a process, and that it will take time for proposed tax cuts to generate the growth they expect.
“If we don’t ever begin the process, it never starts,” said Rep. Richard Carlson, R-St. Marys, who is also on the tax negotiating team. “Hopefully, today we can start the process.”
Sen. Les Donovan, R-Wichita, said the calculation does not consider that any jobs created would spur other jobs and additional revenue.
The new figures are based on a mean wage of $39,290 and an assumption that 39 percent would be spent on goods and services that produce sales tax. That means each new job would produce $965 of state sales tax a year and $994 in income tax.
House and Senate negotiators are wrestling with differences between the major tax plans approved by each chamber. Both plans would eventually eliminate nonwage income taxes for limited liability companies, subchapter S corporations and sole proprietorships. The House Republican plan phases that in over five years. The Senate plan would do it starting in 2013.
Both plans seek to reduce individual income taxes as well. But those proposals would greatly reduce tax revenue the state uses to fund public services, leaving negotiators in search of ways to trim the cost of the tax cuts while providing incentives for businesses to expand or relocate into the state to create jobs.