Kansas Gov. Laura Kelly on Tuesday announced that her administration, in conjunction with Democratic leaders in the Kansas Legislature, has crafted a proposed tax bill that aims generate $97 million in additional revenue for Kansas, support small businesses, and give 94% of Kansans a tax cut – all with the hopes of neutral, balanced state budget.
“COVID-19 has brought unprecedented challenges for hard-working Kansans, their families, and their businesses,” Governor Laura Kelly said. “We know they need relief – and they need it as soon as possible. Our proposal is an amendment to Senate Bill 22, that will provide tax relief to the vast majority of Kansas families and assist in our state’s economic recovery from the COVID-19 pandemic.”
All remote sellers – whether selling through a marketplace platform like Amazon or Etsy, or on their own – have been instructed to register and collect tax on property that is shipped into Kansas. But under current tax code, out-of-state retailers are able to dodge the use tax on sales to Kansas customers.
With today’s proposed plan, the marketplace facilitator would be responsible for collecting and remitting the tax on behalf of the remote sellers on their platform. This would allow the state to collect from fewer entities and increase compliance. Kansas is one of three states that has not enacted a marketplace facilitator provision.
The new plan also imposes taxes on digital products, like video streaming services.
“When out-of-state retailers can duck taxes, there is no way for the local clothing store up the street or the local book store to try and compete with out of state prices,” Governor Kelly said. “By requiring marketplace facilitators to collect use tax on out-of-state products, we level the playing field for Kansas main street businesses.”
Together, these marketplace facilitator and digital goods provisions would generate approximately $97 million in additional revenue for the state. That revenue would then be used to increase Kansas’s standard tax deduction by 20% in tax year 2021 and 35% in tax year 2022.
If the revenue neutral proposal were implemented, 94% of Kansans will see a tax cut.
The plan is proposed as an alternative to Senate Bill 22, which will be heard by the Kansas Senate Tuesday.
“At a time when we’re facing huge unemployment rates and an unsteady economy, we do not need tax cuts for the rich which have no impact on unemployment,” Senate Democratic Leader Dinah Sykes said. “At a time when we’re facing economic uncertainty, we do not need to repeat failed tax experiments which studies have shown – and which we have seen firsthand here in Kansas – have no impact on economic growth. Senate Democrats are proposing solutions that will grow our economy, keep Kansas businesses competitive, and keep more money in the pockets of Kansas families.”
“During a time of economic uncertainty and in the midst of a pandemic, Republicans are pushing to spend over $600 million in tax cuts for giant multi-national corporations,” House Democratic Leader Tom Sawyer said. “The vast majority of Kansans would receive no tax relief. We will always continue to fight for tax cuts that help working Kansans lessen their financial burden.”