House Democratic leaders Paul Davis, left, and Anthony Hensley
say Gov. Sam Brownback miscalculated the intensity of political
opposition generated by his plan to retain the state sales tax
at 6.3 percent. (Photo by Tim Carpenter/Topeka Capital-Journal)
Democrats proclaimed and House Republicans inferred Friday the wheels were falling off of Gov. Sam Brownback's tax reform proposal because it extended a statewide sales tax increase and eliminated cherished individual tax breaks.
Democratic leaders Anthony Hensley and Paul Davis said the governor miscalculated the intensity of political opposition generated by his plan to seek retention of the sales tax at 6.3 percent rather than follow a state law dropping the rate to 5.7 percent in July 2013.
"That one provision is the most unpopular part," said Hensley, a Topeka Democrat and the Senate's minority leader.
Davis, the House minority leader from Lawrence, said Republicans had privately shared with Brownback reservations about his tax package unveiled last week in the State of the State speech. Democrats have shouted objections from the tree tops.
"I don't see how it could pass any chamber right now," Davis said.
Simultaneous calculations prompted House Republicans to unveil an alternative Friday that applauded business tax cuts sought by Brownback, but dismissed the governor's move to bury a long list of tax deductions, credits and exemptions, as well as stiff-armed his plan to hold the sales tax at a higher rate.
Brownback, for example, received bipartisan condemnation for proposing the elimination of tax benefits from charitable contributions and interest paid on mortgages.
"We embrace much of what the governor wants to accomplish," said House Speaker Mike O'Neal, R-Hutchinson. "The fact that we may have different-looking plans does not detract from the fact that, bottom line, the endgame for us is very consistent, that we want a pro-growth tax policy in this state that moves us forward."
Rep. Richard Carlson, R-St. Marys and chairman of the House Tax Committee, said the House GOP alternative included legislation passed by the House in the 2011 session earmarking new revenue over 2 percent to income tax cuts.
"This is a blending," he said. "We endorse many of the concepts the governor offered."
The new House Republican option would incorporate the governor's idea of eliminating a $90 million earned-income tax credit relied upon by about 255,000 low-income workers in Kansas. The governor wants to invest those savings into Medicaid programs for vulnerable Kansans, but Democrats are sharply skeptical of this change.
Also wrapped into the GOP House leadership's parcel was the governor's initiative to end payment of state income tax on business earnings of 190,000 operators of partnerships, sole proprietorships and other small businesses.
Unlike Brownback's outline, the House GOP measure didn't set specific reductions in individual income taxes. A key advantage to the alternative would be that legislators wouldn't be asked to vote on sustaining the higher sales tax or repealing a collection of tax breaks.
In a news conference Friday, Brownback said he welcomed spirited House and Senate debate on tax reform and had expected other options to surface.
"I'm open to suggestions," he said. "At the end of the day, we need to get our tax rates down, and we need to get our businesses growing."
The governor wants to collapse individual income tax brackets from three to two and lower rates paid by Kansans. He said a "fair analysis" showed the poor did better under his scheme.
Elements of Brownback's plan have faced assault by Democrats who maintain his tax overhaul would increase the collective tax burden for the state's poorest households. Anyone with adjusted gross income of $25,000 or less would pay higher taxes under the governor's blueprint for reform.
A Kansas Department of Revenue report indicating the largest percentage tax cut in the Brownback plan would go to the group of Kansans with incomes exceeding $250,000.
Brownback said his budget would balance the equation by injecting more money into social service programs designed to meet the needs of those Kansans.
Democrats and moderate Republicans formed a coalition in 2010 to raise the state's sales tax to 6.3 percent to balance the budget. After a three-year period, the law stipulated the sales tax was to move to 5.7 percent with 0.4 of a percent dedicated to state transportation programs.
Tim Carpenter can be reached at (785) 296-3005 or timothy.carpenter@cjonline.com.
http://cjonline.com/news/2012-01-20/govs-tax-plan-floundering-legislature