TOPEKA – Senate President Ty Masterson’s “bigger picture” for tax policy changes came into focus on Monday with a plan that involves reducing tax cuts on food so the state can afford to cut taxes on food. income for the highest wage earners.
The Senate Tax Committee has approved a flat tax plan that would lower the income tax rate for all salary brackets to 4.75% at an estimated cost of about $566 million in the next calendar year. The impact on state revenues would be reduced by applying the food sales tax only to “healthy” items.
Masterson appeared before the committee to promote the two pieces of legislation.
“Is this meant to help only the less fortunate? I think the answer is no,” Masterson said. “They need to be helped, but it’s to help all Kansanians, not just those less fortunate, because the structure is there. The best thing for them is a job. to buy economic development. You have to put in place a tax structure where those jobs stay. And so that helps everyone.
He praised Gov. Laura Kelly for effectively using her “accept the tax” line during last year’s gubernatorial campaign, where she touted passage of legislation to phase out the state’s 6.5 percent sales tax on the food. But she urged lawmakers to look at the “bigger picture.”
Masterson’s proposal would repeal the state’s food sales tax phase-out, which would reduce annual revenues by approximately $450 million when fully implemented on January 1, 2025. Instead, Senate Bill 248 would exempt certain food items from both state and local sales taxes, reducing state revenues by approximately $284 million in the next fiscal year.
The goal, Masterson said, is not to incentivize healthy food choices. The plan is to afford tax cuts elsewhere, he said.
“You can do things in an overall package, like take taxes out of Social Security, and if you’re really interested in helping those in their golden years, you want to look at stuff like that,” Masterson said. “The other thing we need to do is look at the structure we’re in. The states that are doing the best are the zero income tax states. And this is not even an attempt to get there. The second level are those with the flat tax with a single rate. So structure is actually the most important thing to achieve. And this would make it possible to arrive at a structure with a lower rate».
Opponents of the “healthy foods” legislation include grocers and family advocates who say the change would be confusing, difficult to implement and reduce revenue for local governments. They also raised questions about which items qualify as “healthy.”
The list of healthy foods is based on foods that qualify for the federal nutrition program for women, infants, and children. The legislation specifies fruits and vegetables; meat, poultry and fish; eggs, milk, cheese and yogurt; artificial milk; brown or brown bread; corn or flour tortillas; pasta; brown rice, bulgur, oatmeal and brown barley; breakfast cereals; beans and nuts; and peanut butter.
Jami Reever, executive director of Kansas Appleseed, said one in four Kansas children live in a household that cannot afford to eat nutritious meals.
Additionally, Reever said, one in six Kansans live in a food desert, meaning they don’t have access to a grocery store. Those buying their food from a convenience store, for example, may have to choose white rice over brown rice because that’s what’s available.
“Families have to make really tough choices every single day about what they feed their families,” Reever said. “I think it’s better for children to go to bed with full bellies than without food. And I’m concerned that by simply adding to the food bill, they’re going to have to make some really impossible choices.
Senator Caryn Tyson, a Parker Republican who chairs the tax committee, took issue with mailers sent from Kansas Appleseed soliciting support for eliminating the sales tax on food. Tyson’s complaint: The sales tax break passed last year applied to “groceries,” not “food.”
Tyson: “Your flyers were absolutely misleading then, why did you say to remove it on the food.”
Reever: “We called it a food sales tax.”
Tyson: “Yes, which is misleading.”
Reever: “Thank you for pointing that out.”
The committee concluded its hearing on the sales tax bill in the morning, then reconvened during the lunch hour to consider other proposals. They included Senate Bill 169, an alternative to the flat tax plan proposed by the Kansas House.
Under current law, the income tax rate is 3.1% for income less than $15,000, 5.25% for income between $15,000 and $30,000, and 5.7% for income greater than $30,000. Dollar amounts are doubled for couples filing jointly.
SB 169 would eliminate income tax for those earning less than $5,225 a year and levy a rate of 4.75% on everyone else.
Critics of the flat tax liken it to former Governor Sam Brownback’s “tax experiment” because it involves a sudden drastic reduction in state revenues and disproportionately favors higher wages.
“For the life of me, I don’t understand why the committee is going down this path,” said Senator Tom Holland, D-Baldwin City. “We tried something very similar with the Brownback tax experiment. My concern is not just that it’s a more regressive tax, again, it’s really effectively reducing the tax rate for the wealthier Kansans. The second thing is that we simply cannot afford it.
Sen. Virgil Peck, R-Havana, said he wants to “make sure it’s on record” that the flat tax is different from legislation passed in 2012, which cut the rate for top incomes and eliminated the income tax for businesses.
Peck said he supports the 2012 plan and believes it would have worked if lawmakers had controlled spending.
“This is ancient history — or at least history, not ancient,” Peck said. “And so I thought I’d mention this is not the Brownback tax plan. This is the legislature’s attempt to do some things to make our state more competitive for our workers, to bring businesses and citizens to our state.”
The committee passed the flat tax bill on a party line vote, sending it to the full Senate for consideration.
Correction: Senator Tom Holland described the flat tax as “regressive.” An earlier version of this story misquoted him.
