Robocalls urge Kansans to oppose changes to tax exemption for businesses

Kansans are receiving robocalls warning them of a tax hike on the horizon for small businesses and urging them to call their lawmakers to oppose any changes to a tax exemption for business owners.

The calls are paid for by the Kansas Club for Growth and are a preemptive response to the notion that lawmakers might tweak a tax exemption for business owners in the face of a $400 million budget hole.

“Here at the Club for Growth we know that Kansas small businesses use their tax savings to expand their businesses and create jobs for Kansas workers,” the call states.

The listener is then asked to press 1 in order to be connected directly with his or her representative in Topeka. “Tell them that you’re a small business and you need them to fight for small business by keeping taxes low,” the call urges.

The talking point that relieving business owners of the need to pay state taxes will spur job growth is similar to that used by Gov. Sam Brownback’s administration since before the exemption for owners of limited liability corporations and other businesses was signed into law in 2012.

Brownback has been resistant to the idea of changing the exemption. The governor’s office said it had no connection to the ads.

The two lobbyists listed for the Club for Growth in the Kansas secretary of state’s database are Mark Dugan and David Kensinger, former Brownback aides who were involved in the crafting of the administration’s budget and tax plans.

The Eagle reported in January that budget director Shawn Sullivan sent Dugan and Kensinger a private e-mail with a draft of budget information weeks before it became public. Attorney General Derek Schmidt issued an opinion this week that private e-mails from state employees are not subject to the state’s open records law even when they deal with public business.

“As the Legislature considers changes to pro growth tax policy, the Kansas Club for Growth wants to make sure that small businesses, the key economic engine of our economy, are part of the conversation,” Dugan said in an e-mail. “We respect the Legislature has a challenging job ahead and will work with leaders in the Legislature to support the transition from taxes on productivity to taxes on consumption.”

The governor has proposed increasing taxes on tobacco and alcohol.

Dugan’s e-mail did not address a question about the pair’s involvement in the administration’s budget planning. He also did not provide data to support the claim that small business owners are using their tax savings to hire new workers.

Some prominent legislative leaders, such as Senate President Susan Wagle, R-Wichita, and House Tax Chair Marvin Kleeb, R-Overland Park, have floated the possibility of tightening a tax exemption passed in 2012 that has eliminated income taxes for more than 330,000 business owners and farmers.

Wagle has said fairness is one reason to revisit the exemption, noting that a doctor who works in a hospital pays taxes while a doctor who owns a private practice pays no taxes. She said she and other lawmakers have heard this point repeatedly at public forums.

Wagle said the 2012 tax-cut bill wasn’t perfect and that the state couldn’t predict its full impact. She said she believes many business owners have used the tax savings to reinvest in their businesses and hire more workers, but she also said that law has created a loophole for private contractors to avoid paying taxes even when they have no intention of hiring new workers.

“A lot of individuals have created a business entity so they can take advantage of the zero (tax) growth. But we don’t have evidence that a lot of them are hiring people,” she said, noting that 72,000 businesses in the state pay unemployment tax.

“So I don’t know if the ads on the radio or if telephone calls are going to change the perspective of legislators," she said. "This our first day back. We’ve only been here a few hours…I think for the most part there’s a lot of people who are concerned about the equity issue.”

Doug Sachtleben, communications director for the national Club for Growth, said the Washington, D.C.-based national organization was not involved with the Kansas campaign.

Sachtleben said the Kansas group had licensed the name from the organization, which has helped propel prominent conservatives, such as U.S. Sen. Ted Cruz, into office, and is known for its strong anti-tax stance. He said that aside from the shared name, there’s no affiliation and the two groups operate independently.

The Kansas Club for Growth’s 990 tax form filed with the IRS for 2013 lists Wichita as the headquarters and David Murfin as president. Murfin is owner of the Murfin Drilling Co. and various holdings, including Murfin Investments LLC. He is also a member of the Governor’s Council of Economic Advisors.

This story was originally published April 29, 2015 at 2:53 PM with the headline "Robocalls urge Kansans to oppose changes to tax exemption for businesses."