A Republican plan to cut taxes in Kansas died Tuesday in the GOP-controlled Legislature when enough members concluded that it would favor wealthy taxpayers too much and upheld the Democratic governor's veto.
The vote in the state House was 81-42, leaving GOP leaders three votes shy of the two-thirds majority needed to override Gov. Laura Kelly's veto last month. The plan would have provided nearly $1.6 billion in income, sales and property tax cuts over the next three years.
Republican leaders haven't been able to overcome Kelly's opposition to their plan to move Kansas to a single-rate or “flat” personal income tax from its current three-tier system. The top rate now is 5.7%, and the GOP plan would have made the single rate 5.25%.
The same impasse last year prevented large tax cuts when Kelly and Republican leaders said they wanted them. Surplus revenues are expected to reach $4.5 billion at the end of June, or 17% of the state's current $25 billion budget. Meanwhile, a dozen other states cut taxes last year, according to the conservative-leaning Tax Foundation.
“We can work it out,” the House's top Democrat, Rep. Vic Miller, of Topeka, told his colleagues, referencing a Beatles song. “We have plenty of time to reach a compromise.”
Lawmakers don't wrap up the year's business until early May.
After Tuesday's vote, Kelly called on them to consider her plan without a flat income tax, cutting $1 billion over the next three years. But it's not clear there's room for compromise. GOP leaders have insisted a flat rate must be included in any plan, and Kelly has said she won't accept that.
Kelly warned that the GOP plan would cause budget shortfalls within five years while the bulk of the income tax cuts, in terms of total dollars, went to top earners. Republicans dismissed her projections and said their plan helped everyone.
After Tuesday's vote, the House's top Republicans issued a statement accusing Kelly and her allies of “gamesmanship” and blaming them for the lack of tax relief so far.
“The Democrats' games are played at the expense of real people who need real relief right now,” the House speaker, speaker pro tem and majority leader said in a joint statement.
But Republicans have supermajorities in both chambers and could have overriden Kelly's vetoes if the GOP were fully unified. In the House on Tuesday, five Republicans voted no.
One of them, southeast Kansas Republican Rep. Trevor Jacobs, among the House's most conservative members, said the plan would shift most of the state's income tax burden to the working class, an argument other Republicans dispute.
“Real work needs to be accomplished for the relief of all Kansans, not just a select few,” he told his colleagues.
Even if the House had voted to override Kelly's veto, Republican leaders would have faced a tough vote in the Senate. The state constitution would have allowed the Senate to wait until March 22 to vote — greatly narrowing the window to consider another tax plan if the effort to override failed there.
“While I am neutral on the flat tax, I cannot continue down this path to failure,” said Republican Rep. Randy Garber, a northeast Kansas conservative, explaining his no vote.
Republican leaders had sought to entice Kelly by including provisions she proposed or endorsed. The GOP plan would have eliminated the 2% sales tax on groceries on April 1, cut property taxes for homeowners and made all retirees' Social Security benefits exempt from income taxes.
The GOP plan also would have exempted the first $20,300 of a married couple’s income from state taxes, more if they have children, with the amounts rising with inflation after 2025.
Republicans initially said an additional 310,000 poor and working class Kansas filers would no longer have to pay personal income taxes and took to wearing green buttons saying, “310K." But that figure was a misreading of state data, and the actual figure is about 110,000.
Still, Republicans said, their plan helped the state's poorest residents. House Taxation Committee Adam Smith, a Republican from western Kansas, unsuccessfully urged his colleagues to overlook any flaws by also quoting a legendary rock band, the Rolling Stones.
“You can't always get what you want, but if try sometimes, you just might find you get what you need,” he said. “Kansans need tax relief.”
