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Minutes for HB2278 - Committee on Taxation

Short Title

Calculating income tax rates through the use of formulas.

Minutes Content for Tue, Jan 21, 2020

Adam Siebers provided an overview on HB2278 stating it was a bill from the 2019 session.  He noted if the Committee moves forward, there will need to be a few technical amendments made to update to the current session.   The contents of the bill amend the current income tax rate structure and the qualifying amounts for married, filing joint returns is $100,000 and individuals would be $50,000.  The rate of the tax would be set by a formula that will determine tax liability.  

Kathleen Smith, Department Revenue stated the fiscal note for HB2278 is being revised.  She noted the estimated fiscal note based on the 2018 tax returns would have an impact in FY2021 of $5.6 million, FY2022 $4.3 million and FY2023 $4.4 million.  The administrative costs are currently being revised.  She stated a revised fiscal note will be available with the key elements of how the change in the rate would be calculated, total receipts and amount for administrative costs.   

John Lee, Tax Simple Center provided an overview of the linear and gradual (LG) tax simplification that has been researched for 10 years and supported by their 12 publications. Mr. Lee noted the LG tax system has 15 benefits which can simplify the current tax system and save the State of Kansas money each year.  He noted the current system is complex which is time consuming with many pages of withholding and tax tables.  HB2278 can be used to simplify and match existing tax rates with two smooth tax ranges.  The two tax rate ranges that could  to reduce tax rate and tax calculation errors  (Attachment 1).

Mr. Lee introduced Doctor Robert Kao, Professor of Economics and Finance at Park University in Kansas City, Missouri who provided comments on the tax simplification formula.   

Mr. Lee stood for questions from the Committee. 

Michael Austin, Kansas Policy Institute submitted written testimony as an opponent to HB2278 (Attachment 2).

Natasha Schamberger, CPA, Kansas Society of CPA's submitted written testimony as neutral to HB2278  (Attachment 3).

After asking if there were any other conferees and seeing none, Chairperson Johnson closed the hearing on HB2278.

Meeting adjourned at 4:05 pm.

Next meeting scheduled January 22, 2020.