May 2, 2017

KCEG Executive Director urges caution as tax debate starts fresh

Today, the Kansas Senate planned to take up Conference Committee Report on House Bill 2067, the first comprehensive tax reform proposal of the veto session. When the debate was abruptly canceled, Kansas Center for Economic Growth (KCEG) Executive Director Heidi Holliday urged the Legislature to proceed with caution.

KCEG has strongly advocated for tax reform that ends Kansas’ structural deficit, generating sufficient revenue to adequately fund schools, balance the budget and eventually position the state to stop raiding highway dollars, delaying KPERS contributions and utilizing other temporary revenue sources to keep Kansas above water. CCR for House Bill 2067 generated only approximately $425-450 million.

“This bill was a great starting point,” said Holliday. “But as lawmakers head back to the drawing board, they should carefully consider the big picture. If they fail to enact tax reform that generates enough revenue to keep schools open in August, they will likely be forced into yet another short-term band aid before this session adjourns. That is a risky gamble to take when Kansas voters so overwhelmingly want a simpler, more sustainable solution that can be accomplished in one vote.”

Since launching the Rise Up, Kansas campaign last December, KCEG has encouraged lawmakers to support proposals that include three structural fixes to the tax code, including:

  • Ending the “March to Zero;”
  • Re-instating a third income tax bracket on top earners; and
  • Closing the “LLC loophole.”

“The tax bill lawmakers would have debated today included essential components for comprehensive tax reform,” said Holliday. “Unfortunately, it fell far short of generating the revenue Kansas needs to pay its basic bills. Let’s get this right.”

It is worth noting that, of all the major revenue-generating proposals enacted by the Kansas Legislature in the last 15 years, none passed in the form of multiple bills. Despite the widely varying political climates of 2002, 2010, 2013 and 2015, only one major tax bill garnered enough votes to pass both chambers each of those years. If history is any indication, lawmakers would be prudent to account for this trend as the next tax proposal takes shape.

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ClayRELEASE: KCEG Executive Director urges caution as tax debate starts fresh