The U.S. Senate is preparing to vote on tax cuts that critics charge will take the country down the path of Kansas, where Gov. Sam Brownback’s signature tax cuts led to years of budget woes.
Proponents of the tax cuts – some of them from Kansas – are just as sharp in their rebuttals. They say Congress won’t repeat the mistakes Kansas made, and in any case, the plans are different than the policy tried in Kansas.
The Senate is headed toward a vote as early as Thursday night.
“Kansas is just now emerging from the damage caused by a similar failed tax plan. Kansans know better than most that we cannot afford this tax reform,” said David Jordan, director of the Alliance for a Healthy Kansas.
Rep. Ron Estes, R-Wichita, wrote in the Wall Street Journal on Nov. 14 that Democrats have become distracted by Kansas’ experience. The state Legislature rejected “pay-fors” to make up for the revenue lost to tax cuts, he said.
He wrote that the Kansas plan and national GOP tax efforts aren’t comparable.
“Cutting the rate to boost the economy is a core feature of the GOP’s national proposal, but that wasn’t a part of the Kansas plan,” Estes wrote.
In 2012, Kansas lowered personal income tax rates and eliminated income taxes on certain kinds of businesses known as pass-through entities, because their profits “pass through” to their owners. The exemption for pass-through entities was derided as a loophole and its repeal had bipartisan support. Kansas left corporate tax rates unchanged.
Supporters of the Kansas cuts promised at the time that the rate reductions would spur economic growth. The idea was that additional growth would ultimately produce more revenue that would pay for the tax cuts.
That didn’t happen. Instead, state agencies saw several rounds of budget cuts. The Legislature, over Brownback’s veto, overturned much of the 2012 policy earlier this year.
“Instead of bipartisan tax reform, Republicans are serving up the same trickle down nonsense that happened and failed in Kansas,” Sen. Debbie Stabenow, a Michigan Democrat, said at a news conference on Nov. 2.
The overall package before the U.S. Senate is a blend of generous tax cuts for businesses and more modest tax cuts for families and individuals. It would mark the first time in 31 years that Congress has overhauled the tax code.
The package would lower the corporate income tax rate from 35 percent to 20 percent, and it would allow businesses owners to deduct up to 20 percent of their business income.
The plan would nearly double the standard deduction to around $12,000 for individuals and about $24,000 for married couples. The tax cuts for individuals would expire in 2026 while the corporate tax cuts would be permanent.
The House passed its own tax bill earlier in November. Both the House and Senate must pass identical legislation, however, before it can be sent to President Trump to sign into law.
Both Kansas senators have signaled they support the Senate Republican tax plan.
Sen. Pat Roberts said the complexity of the corporate tax system acts as a brake on the economy. “Today, we are making government a partner, not a regulatory adversary,” he said on the Senate floor.
An earlier procedural vote on the tax bill represented a “significant step forward in achieving tax relief for families in Kansas and across America,” Sen. Jerry Moran said.
Contributing: Associated Press