Analysis: GOP big obstacle for Kan. gov. on taxes

TOPEKA, Kan. (AP) -- Democrats have been the Kansas Legislature's harshest critics of Republican Gov. Sam Brownback's push to eliminate the state's personal income tax, but a bigger obstacle to his ambitions comes from GOP lawmakers, despite their support for his goal.

Brownback wants to follow up on big individual income tax cuts enacted last year by phasing in a second round of rate reductions during the next four years. But he's also trying to avoid the big cuts in education funding, social services or public safety predicted by critics of last year's tax reductions.

So to help stabilize the budget, Brownback also wants to cancel a sales tax decrease scheduled for July. Many legislators in both parties don't want to break the promise to constituents, and the powerful Kansas Chamber of Commerce is against doing it. Few, if any, Democrats will vote for Brownback's proposal, and it's a tough sell for some Republicans.

The governor and his allies did prevail in the Senate, which passed a bill last week further cutting personal income tax rates and keeping the sales tax at its current rate. But the House expects to debate its own legislation this week to allow the sales tax to drop and make less aggressive income tax rate reductions than Brownback proposed.

"Where the governor's going, we like, but not how we get there," said Rep. Scott Schwab, a conservative Olathe Republican who's vice chairman of the House Taxation Committee.

Brownback is lionized in some national conservative circles for attempting to position Kansas to phase out personal income taxes. But last year's cuts created a budget shortfall and, if left alone, will continue creating gaps in the short-term. The governor repeatedly promised Kansas could cut income taxes ? and stimulate its economy ? without jeopardizing education funding, social services, public safety or highway projects.

"These are good things to invest in," Brownback told GOP senators the night before their chamber's debate on taxes. "You've got to work it all together."

Critics question the fairness of eliminating income taxes and forcing Kansas to most heavily rely on the sales tax to finance state government. Poor Kansans tend to pay a higher percentage of their incomes to the sales tax than wealthy residents, and Democratic Sen. Tom Holland of Baldwin City said the Senate's tax bill makes a regressive tax system worse.

"The legislation is a continuation of tax policy designed to benefit big business and the wealthy," said Holland, who ran unsuccessfully for governor against Brownback in 2010.

Brownback's administration contends last year's income tax cuts were so broad that all classes of taxpayers benefit, with social services already protecting the state's poorest residents.

Republicans, who hold a 92-33 majority in the House, would have to be seriously divided for Democrats' continued criticism to mean much politically.

GOP legislators were divided in 2010, when then-Democratic Gov. Mark Parkinson successfully pushed lawmakers to boost the sales tax to its current 6.3 percent rate to balance the budget. Moderate Republicans sided with Parkinson, but backers of the tax increase promised most of it would be temporary, which is in part why the sales tax is set to drop to 5.7 percent in July.

Some current House Republicans don't want to break the promise and others ran against the increase in 2010 and 2012. Democrats saw a net loss of 16 seats in the House in the 2010 election.

Freshman Rep. Allan Rothlisberg, a conservative Grandview Republican, said if a new tax bill doesn't contain a "hard-core end" to the 6.3 percent sales tax rate, "Then the answer is no."

The plan before the House, approved by its Taxation Committee, does demonstrate the pitfalls for income-tax cutters in also allowing the sales tax to drop. For one thing, the plan siphons $370 million from highway projects over two years.

The measure also doesn't guarantee individual income tax rates will drop during the next four years, as Brownback's plan does. Instead, the House committee's plan sets up a mechanism for automatically lowering income tax rates if overall state revenues grow by more than 2 percent each year.

Legislative researchers projected the top rate, which dropped to 4.9 percent from 6.45 percent under last year's law, could fall to 4.88 percent for 2016.

Rep. Arlen Siegfreid, a conservative Olathe Republican, who supports phasing out income taxes, said the House plan slows down the process considerably.

Speaker Ray Merrick, a Stilwell Republican, said GOP leaders still believe Brownback's sales tax proposal will fail in the House, but nevertheless are "running the traps."

"I'm still pretty certain, but it's a moving target," Merrick said.

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Political Writer John Hanna has covered Kansas government and politics since 1987. Follow him on Twitter at www.twitter.com/apjdhanna

Source: http://news.yahoo.com/analysis-gop-big-obstacle-kan-120937290.html

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