Hawver: Tax Cut?

The major tax cut bill of the 2019 Legislature has now passed, in slightly different forms, both the House and Senate and we’re waiting to see what happens next…and next…and possibly next as the 2017 federal tax cuts trickle down into state finances and politics.

Martin Hawver
Martin Hawver

The Legislature’s tax debate wasn’t all that exciting because, well, it’s a tax bill and it is complicated and technical. So, the excitement starts now.

Key is that both the Republican-controlled House and Senate have agreed to the major income tax cut provisions of the bill. The Senate baked the cake, with about $187 million in income tax cuts this year, about $50 million for individual income taxpayers and about $137 million for corporate income taxpayers. Next year, the ratio changes, with some individual Kansans seeing about $60 million in cuts, corporations about $51 million in cuts.

And when that cake got to the House, well, it got frosted. The House added a 1 percent cut in the state sales tax on food (from 6.5 percent to 5.5 percent) which will cost the state about $43 million in lost revenue next fiscal year and about $66 million in lost revenue (or, kept by food buyers), partially paid for by a new Internet sales tax, which might bring in about $21 million next year and maybe $33 million a year after that.

The next thing to happen will be when the Senate decides whether it wants that appealing frosting. We all want to pay less sales tax on the food or anything we buy, and those local stores don’t want Internet sellers, to not have to collect Kansas sales tax that they have to charge customers, which costs them, customers.

Now, part of the House’s frosting looks better than it’s actually going to taste. Dropping the sales tax on food (starting Oct. 1) is going to leave a little more change in Kansans’ pockets. And the guy buying steak gets the same percentage cut as the guy buying bologna. Hard to tell whether either will notice the sales tax cut, but the provision is probably worth mention on a campaign palm card.

And everyone who has a store is by this time tired of customers saying they can get stuff cheaper over the Internet…especially without a 6.5 percent sales tax added in as local stores must.

So, watch for the Senate to decide next week whether to negotiate those food and Internet taxes or just OK them and vote to send the bill to the governor.

Next after that?

It’ll be the governor likely vetoing the bill because it will upset her budget and because nobody’s really sure yet just what that federal tax cut /expansion “trickle down” is going to mean to state revenues. Lots of guesses, lots of charts and tables and explanations, but the Department of Revenue hasn’t actually counted the dollars in additional revenue that federal tax cut will send to Kansas.

While the House and Senate stand for reelection next year, Gov. Laura Kelly’s got nearly four years to figure out how to pay for basic state responsibilities: schools, highways, possible expansion of Medicaid, pension, roads… She needs revenue to pay for all the things Kansans want and need from their government.

And next after that?

It’ll be the House and Senate trying to override the veto. The House passed the bill 76-43, and in that chamber, it takes 84 votes to override a veto. The Senate earlier passed the (un-frosted) bill 26-14, just one vote short of the 27 needed for an override.

And next after that? If it becomes law, we’ll see how House and Senate candidates tout it.

One Republican already has calculated that a 1 percent drop in the sales tax is—ready?—a 15 percent cut in the sales tax on food…

 

By Martin Hawver

Syndicated by Hawver News Company LLC of Topeka; Martin Hawver is publisher of Hawver’s Capitol Report—to learn more about this nonpartisan statewide political news service, visit the website at www.hawvernews.com

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