Top Republican legislators and the Democratic governor in Kansas have reached a compromise on cutting taxes, as the GOP leaders abandoned a plan to move the state to a single-rate personal income tax that Governor Laura Kelly strongly opposed. The compromise package is expected to save taxpayers about $1.4 billion over the next three years, which is smaller than previous plans approved by each chamber and vetoed by the governor. The dispute over tax rates has been ongoing, with Republicans wanting to move to a single-rate plan, while Democrats argued that it would mainly benefit the wealthy. The final plan would preserve three personal income tax rates but cut the top rate to 5.5% and eliminate state income taxes on retirees’ Social Security benefits.
In addition to the changes in personal income tax rates, the compromise plan includes increasing the state’s standard personal income tax deductions, increasing an income tax credit for child care expenses, reducing property taxes for public schools, and ending the state’s 2% sales tax on groceries six months early. Despite the bipartisan nature of the deal, some lawmakers expressed discontent with the final plan, stating that it does not cut property taxes enough and does not provide sufficient financial relief for lower-income families. Overall, the new plan is worth about $430 million annually, which is less generous than the previous proposals put forward by Republicans.
The tax cut debate in Kansas is significant due to the state’s history with income tax cuts implemented in 2012 and 2013 under GOP Gov. Sam Brownback. The experiment led to large budget shortfalls and persisted until legislative majorities reversed most of the cuts in 2017. Governor Kelly, who won her term by running against Brownback’s fiscal policies, has been critical of Republican tax proposals, calling them fiscally reckless. However, Republican leaders argue that with a surplus of more than $4 billion, Kansas can sustain the proposed tax cuts and avoid repeating the mistakes of the past.
The compromise on tax cuts in Kansas came after the Georgia Republican-controlled Legislature passed personal and corporate income tax cuts that the governor supported. Like Georgia, Kansas has a substantial budget surplus, which has prompted discussions on the best way to allocate the state’s funds. While Republican leaders maintain that the proposed tax cuts are sustainable, concerns remain about the impact on property taxes and lower-income families. The compromise plan in Kansas is an attempt to balance competing interests and provide relief to taxpayers while avoiding the mistakes of the past.
With all state Senate and House seats up for election this year, lawmakers in Kansas felt the pressure to reach a compromise on tax cuts to avoid having no cuts enacted for the year. The discussions surrounding tax policy have been complex and challenging, given the state’s history with previous tax cuts and budget shortfalls. The compromise plan, while not meeting the expectations of all lawmakers, represents an attempt to find common ground and move forward with tax relief measures that benefit a wide range of taxpayers in Kansas.
