On Wednesday, most of Governor Brownback’s tax plan that he discussed during the early days of this session made it to the Senate floor for debate. House Bill 2059 called for retaining the temporary sales tax rate (which was to sunset in July of this year), repealing the mortgage interest deduction, and making further cuts to personal income tax rates. The bill also includes clarifications and revisions of the original legislation which passed during the 2012 session.
Members of the Senate offered 11 amendments during five hours of debate. The first major amendment that passed added back the mortgage interest deduction but gradually reduces the value of ALL itemized deductions (with the exception of charitable contributions) by 94% for a six year period. What this means for the taxpayer is that $1,000 worth of deductions will only result in a return of $760 in tax year 2013, a return of $590 in tax year 2014, a return of $350 in tax year 2015, and a return of $60 in tax years 2016 and later. Deductions for gambling losses were also eliminated.
Amendments offered to sunset the temporary sales tax, to reinstate tax credits such as the disabled access tax credit, the child independent care credit, the food sales tax rebate, and the homestead tax credit, and to increase the standard deduction all failed.
The bill passed on a vote of 25-14. The bill now goes to the House for consideration.
I voted against HB 2059. Once again, low-income and middle-class working Kansans will be hit hardest under this bill while the state simultaneously faces huge negative ending balances starting in fiscal year 2017. In addition to being one of the largest tax increases in Kansas’ history, HB 2059 also violates the so-called principles of reform that Governor Brownback laid out last year. It further complicates the Kansas tax code by treating certain itemized deductions differently than others. Much more importantly, it actually takes more money out of the pockets of Kansas families that it puts in during the first four years of implementation. And even more disturbingly, the bill reneges on the promise the Kansas Legislature made to sunset the temporary sales tax when the tax was first passed in 2010.
This legislation is a continuation of tax policy designed to benefit big business and the wealthy at the expense of hardworking Kansas taxpayers. Hopefully the Kansas House will bring forward a more balanced solution for the House / Senate tax conference committee to consider.