Kansas plans to attract big bills on corporate tax cuts

Kansas State Sen. Caryn Tyson, R-Parker, explains her vote against a bill that would allow the state Department of Commerce to offer $1 billion or more in incentives to attract a project unnamed by a company that has not been identified to the state, Thursday, Jan. 27, 2022, at the Statehouse in Topeka, Kan.  The Senate passed the bill.  (AP Photo/John Hanna)

Kansas State Sen. Caryn Tyson, R-Parker, explains her vote against a bill that would allow the state Department of Commerce to offer $1 billion or more in incentives to attract a project unnamed by a company that has not been identified to the state, Thursday, Jan. 27, 2022, at the Statehouse in Topeka, Kan. The Senate passed the bill. (AP Photo/John Hanna)

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Kansas could phase out its corporate income tax in a move that would also broaden its incentives to attract new business, and the provision is problematic as lawmakers rush to help the state attract a project. undisclosed multi-billion dollars.

The state House Commerce Committee is expected to vote Thursday on a bill authorizing hundreds of millions of dollars in incentives for billion-dollar business projects after the Senate approved the measure last week. The Republican-controlled Legislature hopes to wrap up work on the bill Monday so the state’s Commerce Department can offer an anonymous company $1 billion or more in incentives to make Kansas the home of what the Department officials say it’s a $4 billion facility.

Republican senators added a corporate tax cut, arguing that other businesses, especially small ones, should also get a break if the state offers huge incentives to sole proprietorships. But the provision is written so that the state will continue to reduce the tax in future years, perhaps until it is eliminated.

Kelly, other Democrats and the Department of Commerce favor a modest reduction in the corporate tax rate. Even Republicans in favor of a series of cuts acknowledge that the wording of the contested provision is vague enough that the cuts could be more aggressive than intended.

“It’s confusing,” Senate Speaker Ty Masterson, a Republican from Andover, said Wednesday. “I think we’ll clear that up.”

The measure would give the Department of Commerce the power to reduce a company’s tax burden, cover part of its payroll, reimburse certain employee training costs and reduce its local property taxes. It could also offer breaks to the main suppliers appointed by this company.

Assistant Commerce Secretary Paul Hughes told the House committee this week that Kansas is pursuing “a huge, advanced manufacturing plant” that will employ 4,000 people earning an average of $50,000 a year. Officials and lawmakers who know more details say they were required to sign an agreement not to release the information publicly.

The bill would also reduce the state’s corporate income tax by half a percentage point once that corporation begins receiving the incentives, raising the top rate from 7% to 6.5%. . The bill says the tax will continue to drop by half a percentage point for each year “a qualified business or supplier receives benefits.”

Senate Commerce Committee Chair Renee Erickson, a Republican from Wichita, said the goal was to secure multiple corporate income tax cuts so Kansas would be more competitive with other states. .

“Reducing it by half a percent once will not reach a competitive level,” she said.

The first corporate tax cut is expected to cost the state about $48 million a year in revenue. The state is on track to collect more than $660 million in corporate taxes in the current fiscal year 2022.

The Big Incentives program has had bipartisan support, but Sen. Tom Holland, a Democrat from Baldwin City, said that if GOP lawmakers stick with the corporate tax cuts being made, “I I can see a lot of senators running away like scalded cats from this deal.”

Even some conservative House Republicans oppose the ongoing cuts.

“It’s fiscally irresponsible, and so we’ll have to address it,” said House Commerce Committee Chairman Sean Tarwater, a Republican from Stilwell.

Masterson said the intent was to cut the corporate tax rate every time the state makes a “mega deal” with a company, so it would take 14 such deals to phase out the Corporation tax. The Senate version of the bill would require lawmakers to review the big incentive program next year.

“We’re on the phone now, trying to make sure we get along,” Masterson said.

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