Kansas House Committee Targets One of Brownback’s Signature Tax Cuts
TOPEKA – A bill that would place business owners back on state income tax rolls as part of a fix for the state’s budget gap won approval from the House Taxation Committee on Monday despite strong objections from conservative lawmakers.
HB 2430 repeals one of Gov. Sam Brownback’s signature policies, a tax exemption enacted in 2013 that allows certain business owners to pay no income tax. The bill passed out of committee by a vote of 13-8, drawing support from Democrats and moderate Republicans, who criticized the governor’s tax plan.
The bill, as amended in committee, would tax passive income, such as rents and royalties, at a rate of 4.6 percent and all other business income at a rate of 2.7 percent, the lowest income tax rate. This would bring $133.6 million for fiscal 2016, which begins July 1. The committee shed a provision that would have required businesses to provide proof that they have employees in order to qualify for an exemption.
Lawmakers face a budget hole of more than $400 million for fiscal 2016, and as the Legislature enters the third week of its wrap-up session, there’s still no consensus among Republicans, who hold supermajorities in both the House and Senate, on how to the fill the hole.