Kansas Democrats attack GOP tax plan as corporate give-away - InfoNews

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Kansas Democrats attack GOP tax plan as corporate give-away

FILE - In this Jan. 24, 2019, file photo, Kansas Gov. Laura Kelly answers questions from reporters during a news conference at the Statehouse in Topeka, Kan. Kelly's fellow Democrats are describing a tax relief plan moving through the Republican-controlled Legislature as a give-away to large corporations, and GOP leaders acknowledge that big businesses would benefit, by design. The state Senate planned to take a final vote Thursday, Feb. 7, 2019, on a bill that is designed to prevent Kansas residents and businesses from paying higher state income taxes because of changes in federal tax laws at the end of 2017. (AP Photo/John Hanna, File)
February 07, 2019 - 4:39 PM

TOPEKA, Kan. - Kansas Democrats are attacking a Republican tax relief bill approved Thursday by the state Senate as a give-away to large corporations and and managed to peel away a couple of GOP votes Thursday by highlighting how it benefits big businesses.

The bill is designed to prevent Kansas residents and businesses from paying higher state income taxes because of changes in federal tax laws at the end of 2017. The Senate vote was 26-14 , leaving GOP leaders one vote short of the two-thirds majority necessary to override a veto by new Democratic Gov. Laura Kelly, who has opposed the bill.

A key part of the bill would prevent thousands of individuals from losing itemized deductions on their state forms, but nearly three-quarters of the relief in the first year of the changes would go to businesses — and much of that to corporations with international operations.

"They've had tax breaks for years, and it's time for them to start paying their fair share," said Sen. John Skubal, a moderate Kansas City-area Republican who was one of two GOP senators to vote no.

Kelly and other Democrats want to boosting spending on public schools and expand state Medicaid health coverage for needy families. But Republicans — who have supermajorities in both chambers — are making tax relief a top priority, which would make Kelly's spending goals more difficult.

The populist arguments from Democrats haven't given GOP leaders pause because many Republicans argue that the state's business climate and economy will suffer if it doesn't provide corporate tax relief quickly.

"Our young people are going to have fewer job opportunities and have fewer companies looking at Kansas," Senate President Susan Wagle, a Wichita Republican and the bill's architect, said during its debate. "We need to have an economic environment that encourages growth, encourages new jobs, encourages creativity."

The Kansas Department of Revenue estimates that the bill would save taxpayers $187 million during the next budget year, which begins in July.

Corporations would save $137 million of that, or 73 per cent of the total tax relief, and $81 million — or 43 per cent of the total — comes from provisions designed to prevent the state from taxing foreign income that it hasn't previously taxed.

"How many multi-national corporations are small?" House Minority Leader Tom Sawyer, a Wichita Democrat, said Thursday. "You're not talking mom-and-pops."

The federal tax changes included provisions preventing corporations from sheltering income and assets outside the U.S. that could lead to Kansas and other states taxing foreign income.

The Kansas Department of Revenue said the state is among only a dozen taxing one part of companies' foreign income. Other parts could be taxed by more than half with the federal changes, according to a report last month from the conservative Tax Foundition.

In Kansas, Kelly's called on legislators to wait at least another year to consider tax changes. Her staff has called the tax bill irresponsible, and a conservative GOP senator predicted Wednesday that the bill is headed for "a big, fat veto."

Republicans have the two-thirds majorities needed in both chambers to override a veto, but the Senate vote Thursday showed how Kelly could prevail if just a few GOP moderates bolt.

All 11 Democrats and the Senate's one independent member voted against the bill. Republicans hold 28 seats, but Skubal and Sen. Mary Jo Taylor, a moderate western Kansas Republican, voted no.

Taylor said lawmakers ought to settle budget issues, including school funding, before tackling tax relief. Skubal raised the same issue but said he might have been able to vote for the bill had its relief gone only to individuals.

GOP leaders contend Kansas is receiving an unanticipated "windfall" from the federal tax overhaul championed by President Donald Trump and Republicans in Congress. The state's tax laws are tied to the federal tax code.

Federal individual and corporate income taxes were cut but the overhaul included provisions that are expected to raise revenues in some states while lowering it in others.

The federal tax changes limit itemized deductions, and Kansas estimates that 200,000 individual filers will stop itemizing on their federal returns this year. But only 26 per cent of Kansas filers itemized on their 2017 federal returns, and a smaller group, 14 per cent, itemized on their 2017 state returns.

A Senate committee's hearings last week on the tax bill were dominated by the concerns of business groups and big corporations with a sizeable Kansas presence, such as aviation's Spirit AeroSystems and agribusiness' Seaboard Corp.

A trade association for multistate corporations told lawmakers their state taxes could rise 11 per cent.

"We operate in competitive markets with small margins," David Rankin, a senior Seaboard vice-president, told senators in committee testimony. "It seems counter-productive to penalize U.S.-based companies for growing their international operations."

But Democrats have not been moved by such arguments. Kelly, a former state senator, has said her top tax relief priority would be reducing the state's 6.5 per cent sales tax on groceries — a goal Democrats and many Republicans share.

"If we were to make changes to tax policies, those changes should benefit every Kansan, or at the very least those who need it the most," said Senate Minority Leader Anthony Hensley, a Topeka Democrat. "Giant multi-national corporations with record profits don't fit in either category."


Follow John Hanna on Twitter: https://twitter.com/apjdhanna .

News from © The Associated Press, 2019
The Associated Press

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