Kan. Senate panel reviewing governor's tax plan

TOPEKA, Kan. (AP) -- Revenue Secretary Nick Jordan told legislators Tuesday that Kansas must further reduce individual income tax rates to remain economically competitive, but he faced questions about whether it's fair to the poor to offset those cuts by scrapping deductions for homeowners and raising additional sales tax revenues.

The Republican-dominated Senate Assessment and Taxation Committee opened hearings on tax proposals from conservative GOP Gov. Sam Brownback, expanding two planned days of testimony to three almost immediately so members would have more time to question Jordan. Brownback wants to phase in additional cuts in individual income tax rates over three years, following up on aggressive income tax cuts last year.

But to keep the budget stable, he also wants to eliminate popular income tax deductions for the interest on home mortgages and residential property taxes. He also wants to keep the state's sales tax at its current 6.3 percent rate, rather than dropping it to 5.7 percent in July as dictated by a budget-balancing measure enacted three years ago.

Jordan said the governor's goal is to phase out individual income taxes. Republican governors and legislators in other states, including Louisiana, Missouri, Nebraska and Oklahoma, also are talking about slashing state income taxes in the wake of Kansas' cuts last year. Leaders in all the states say they believe it would spur their economies.

"The goal of the tax policy the governor is working on is, let's grow the Kansas economy," Jordan said. "The competitiveness has grown around the country."

But Brownback's plan is drawing criticism from the Washington-based Institute on Taxation and Economic Policy, a nonpartisan research group. Before hearings started Tuesday, the institute provided The Associated Press with an analysis showing that with the sales tax provision, the plan would boost taxes slightly for Kansans earning less than $20,000 a year while giving the most relief to Kansans earning more than $180,000.

"The governor's proposal will take an unfair tax system and make it more unfair," Matthew Gardner, the institute's executive director, said during an interview.

But the group's analysis also shows that all classes of taxpayers — from the bottom 20 percent earning less than $20,000 to the top 1 percent earning $439,000 or more — would see at least a small income tax cut. Jordan has said all income taxpayers would benefit. The institute's analysis "confirms what we've been telling people all along," he said in a statement before the hearings.

Even some Republicans have been wary of eliminating the tax relief for homeowners because more than 300,000 filers claim property tax deductions and about the same number claim deductions on home mortgage interest. Brownback's administration estimates that ending the deductions will raise $231 million during the fiscal year beginning in July, but the Washington institute believes that estimate is overly optimistic.

Jordan said the governor is being "pragmatic" as he pursues his goal of eliminating income taxes, adding, "I think the governor and everybody's willing to meet with anybody who has a different idea."

The institute said that while the poorest taxpayers would see their income taxes drop slightly under Brownback's plan, the sales tax change would more than offset it, boosting their overall tax burden by $22 a year, which equals two-tenths of 1 percent of the average income for people earning less than $20,000. Meanwhile, even with the sales tax provision, the top 1 percent will save on average more than $6,500 a year, which equals six-tenths of 1 percent of their income.

"It's another round of pretty meaningful tax cuts at the top," Gardner said.

Last week, Jordan met with reporters to bolster the administration's case that further cuts in individual income tax rates would more than offset the loss of the deductions for homeowners. He had examples from four counties.

During Tuesday's hearing, Jordan also noted that about 300,000 Kansans also receive help from the state to buy food.

"You've got to look at it as a full package," he said.

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The governor's tax plan is contained in SB 78. Technical adjustments to last year's law are in SB 79.

Online:

Kansas Legislature: http://www.kslegislature.org

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