Groceries could be slightly cheaper and income tax bills might not go up. It’s a proposal that touches nearly every Kansan.
But a plan advanced by Kansas lawmakers this week could also mean more than $500 million less for the state over the next three years.
Senate Bill 22 — a signature issue for Republicans this year — heads to Gov. Laura Kelly’s desk after final approval by the House Friday on a 76-43 vote.
Republicans hail it as a way to keep taxpayers from owing more because of federal tax changes, while also reducing the sales tax rate on food.
Democrats support reducing the tax on food, but they called the legislation overall a tax giveaway for big corporations. They warned the bill could plunge the state back into financial difficulties experienced under Gov. Sam Brownback.
“It’s a return to the Brownback tax experiment,” Rep. Jim Ward, D-Wichita, said. “An experiment that many of us in this chamber fought for years to repeal and return this state to budget stability and financial responsibility.”
Republicans promised the legislation will benefit the state’s economy and taxpayers.
Speaker Pro Tem Blaine Finch, R-Ottawa, rejected comparisons between the tax legislation and the Brownback tax cuts.
“The reality is just because both things are about taxes, doesn’t mean both things are the same,” Finch said.
He said the legislation returns money to Kansans and businesses that the state would have never collected if the federal tax code hadn’t changed.
The legislation allows taxpayers to itemize their deductions on their state income tax return, even if they don’t itemize their federal taxes. A federal tax code overhaul in 2017 eliminated that option for Kansans. If you’ve already filed your taxes, the bill would allow you to file an amended return until Dec. 31.
The bill cuts the sales tax on food from 6.5 percent to 5.5. percent beginning Oct. 1. For a family of four spending $6,780 a year on food, the savings would amount to less than $100 a year.
“If I could snap my fingers and food sales tax would go away, that would be wonderful,” Rep. Les Mason, R-McPherson, said. “But I think we have to do it on a steady reduction and 1 percent is a good start.”
Kansas is one of only 14 states to tax food and among only seven states that tax food at the full sales tax rate. Neighboring Missouri taxes food at a rate of about 1.2 percent, for example. In Colorado and Nebraska, the rate is zero.
The bill also proposes several corporate tax changes, including permitting deduction of so-called global intangible low-taxed income, or GILTI. It means that multinational corporations could bring profits earned overseas back to the state without having them taxed as income.
The corporate tax provisions account for nearly half of the bill’s cost. Democrats assailed the legislation as a giveaway for big corporations.
“It seems like we are snapping our fingers for the corporations. For the giant, multinational, global corporations ... They always get their wallets fattened,” said Rep. Tim Hodge, D-North Newton.
Republicans have defended the corporate provisions of the bill as fixing the unintended consequences of tax changes at the federal level.
“The federal government did not intend to line the coffers of state governments with increased tax revenues. But that is what’s happened,” Finch said.
The legislation is a priority for Republicans. Senate President Susan Wagle, R-Wichita, went as far as creating and chairing a new committee in an effort to speed the bill.
But early hopes that the bill could pass quickly faded as the Legislature hit the halfway mark of its regular session last week without sending the bill to Gov. Laura Kelly.
The next step for the bill is unclear. The Senate could approve the bill as it stands, or House and Senate negotiators could hammer out a final version.
Regardless, Kelly appears likely to veto it. When the Senate debated the original bill, she called it reminiscent of the Brownback experiment.
Although the bill didn’t include a food sales tax reduction then, Kelly has given no indication her position has changed.