Gov. Sam Brownback’s tax-cutting proposal is on track for a potentially contentious debate in the Senate next week.
The Senate Assessment and Taxation Committee on Wednesday combined the governor’s plan with a bill that provides tax breaks for banks and fixes technical problems in last year’s tax reduction legislation.
Senate Majority Leader Terry Bruce, R-Hutchinson, said he expects the Senate to approve a tax-cutting bill, but he said he expects attempts to let a temporary sales tax expire on time this summer and a move to keep the mortgage interest tax deduction.
“I think it’s going to be a long debate,” he said.
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Brownback’s proposal would eliminate the mortgage interest deduction that saves those claiming it about $300 a year on average. It also extends a six-tenths of a cent sales tax slated to expire in July.
Brownback had proposed also eliminating the real estate property tax deduction that nets about 372,000 Kansans an average $125 tax break. But the Senate panel rejected that idea last week.
Bruce estimated that, as the governor’s plan stands, lawmakers would have to cut $50 million to $70 million from Brownback’s proposed budget.
“You can always cut in the budget, it just depends on how much pain politicians are willing to endure, or the constituency because some cuts have very significant consequences down the road,” he said.
Brownback’s proposal, outlined in his State of the State speech, would lower the lowest tax bracket from 3 percent to 2.5 percent in 2014 and 2015 and then to 1.9 percent in 2016. The top rate would drop from 4.9 percent to 3.5 percent in 2017.
In later years, Brownback aims to reduce tax rates more whenever the state’s revenues grow by more than 4 percent, with hopes of eliminating income tax altogether one day.
Democrats have sharply criticized the plan. They call the income tax cuts irresponsible and say they create a self-inflicted budget crisis that could lead to cuts in services that affect Kansas school children and needy families.
Brownback’s proposal this year is an attempt to mitigate the budget deficits created by the cuts he approved last year.
A nonpartisan analysis of Brownback’s new proposal shows the state would end up collecting nearly $1 billion more in taxes as a result of the tax deductions eliminated in the governor’s new proposal, leading Democrats to call it a tax increase.
But Brownback has countered, saying the proposal, when looked at in conjunction with tax cuts approved last year, is a tax decrease for every tax-paying Kansan.