Current List of 2012 Tax Proposals

Governor’s Tax Plan

Brownback, in his second State of the State address, outlined his income tax reduction proposal to the 2012 Legislature.  The plan reduces the individual income tax rate but also eliminates itemized deductions as well as many income tax credits.  Here are the basics of the proposal:

• Lower individual income tax rates and move from three brackets to two – a 3 percent rate for income under $15,000 ($30,000 for married filing jointly); and a 4.9 percent rate for income $15,000 and over ($30,000 for married filing jointly).

Note:  Current rates are 3.5 percent, 6.25 percent, and 6.45 percent

• Eliminate individual income tax on non-wage business income (as reported by LLCs, S-corps, and sole proprietorships on lines 12, 17, and 18 of the federal 1040 individual income tax return).
• Eliminate itemized deductions
• Eliminate subtraction modifications for 529 education savings program and long-term care contract premiums.
• Eliminate more than twenty tax credits.
• Maintain the current sales tax rate.
• Allows for the 0.4 cent transfer of sales tax to the transportation program in 2013.

House Tax Plan

• The new House version will keep in place the current statutory tax deductions, credits and exemptions, including the food sales tax refund, historic tax credits and mortgage deduction, while following the Governor’s recommendation of leveraging the EITC with federal Medicaid funds from $60 million to approximately $113 million, insuring and increasing the safety net for our most vulnerable citizens.
• The House plan proposes keeping the current statutory sunset of the .6 tenths of 1 percent to the original limit of 5.7 percent.
• The House vision of growth will include the Governor’s small business provision, allowing small businesses to retain non-wage profits and to reinvest that investment capital back into the small business and the creation of new jobs throughout Kansas.
• While meeting the states' obligations and needs, a 2 percent growth factor, similar to the Governor’s proposal, will be built in the plan and all increased revenue over the 2 percent will be used to first reduce the individual income tax brackets, with an emphasis on reducing the low and moderate tax brackets on an accelerated basis.
• The House vision will focus on growth and job creation while insuring a healthy ending cash balance to keep our state on a sound fiscal basis.
• The House will endorse the Governor’s plan to accelerate the severance tax collection on new wells.

Senator McGinn’s Tax Plan

Roll back the .6 tenths of the 1-cent sales tax for fiscal year 2013, instead of the statutory 2012

SB 1 (From last Session)

House Sub. for SB 1, the March to Economic Growth Act (MEGA), would provide for reductions in individual and corporation income tax rates beginning in tax year 2012 based on the extent to which a certain specified group of State General Fund (SGF) tax sources have increased over the base year of FY 2010.

Restoring Tax Equity Proposal – by Senator Dick Kelsey

• Eliminate the sales tax on food
• Eliminate the corporate income tax
• Reduce the individual income tax
  • Starting in tax year 2012, the bottom bracket would be reduced from 3.50% to 3.35%.
  • Starting in tax year 2014, all three brackets would be reduced to 3.10%, 5.60% and 5.90%, respectively.
• Reduce the state sales tax by 1.0%
• Decrease the rate from 6.3% to 5.3%.