Tuesday, February 21, 2023

Double whammy: Top Kansas Republican wants to roll back food tax relief to afford flat tax plan

Sherman Smith, Kansas Reflector
February 20, 2023

Senate President Ty Masterson appears Jan. 20, 2023, before the Senate tax committee to urge lawmakers to support plans to limit tax relief on food to “healthy” items in order to afford a lower income tax rate. (Sherman Smith/Kansas Reflector)


TOPEKA — Senate President Ty Masterson’s “broader picture” for tax policy changes came into focus Monday with a plan that involves rolling back tax relief on food so the state can afford to cut income taxes for the highest wage earners.

The Senate tax committee passed a flat tax plan that would lower the income tax rate for all wage brackets to 4.75% at an estimated cost of about $566 million in the next calendar year. The impact on state revenue would be lessened by applying the sales tax on food to just “healthy” items.

Masterson appeared before the committee to promote the two pieces of legislation.

“Is this meant to only help those less fortunate? I think the answer is no,” Masterson said. “They’re to be helped, but it’s to help all Kansans, not just those less fortunate, because the structure’s there. The best thing for them is a job. We can’t keep on the train of buying economic development. You have to put a tax structure in place where those jobs remain. And so that helps everybody.”
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He praised Gov. Laura Kelly for effectively using her “axe the tax” line during last year’s gubernatorial campaign, where she touted passage of legislation to gradually eliminate the 6.5% state sales tax on food. But he urged lawmakers to consider the “broader picture.”

Masterson’s proposal would repeal the gradual elimination of state sales tax on food, which would reduce annual revenues by about $450 million when fully implemented on Jan. 1, 2025. Instead, Senate Bill 248 would exempt select food items from both state and local sales tax, reducing state revenues by about $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 tax off Social Security, and if you’re truly 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 that we’re under. 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 tier are those with the single rate flat tax. So the structure is actually the most important thing to get to. And this would allow you to get to 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 concerns about which items qualify as “healthy.”

The list of healthy items is based on foods that qualify for the federal Women, Infants and Children nutrition program. The legislation specifies fruits and vegetables; meat, poultry and fish; eggs, milk, cheese and yogurt; infant formula; whole wheat or whole grain bread; corn or flour tortillas; pasta; brown rice, bulgur, oatmeal and whole grain barley; breakfast cereals; beans and nuts; and peanut butter.

Jami Reever, executive director of Kansas Appleseed, said one in four Kansas kids lives in a household that cannot afford to eat nutritious meals.

Additionally, Reever said, one in six Kansans lives in a food desert, which means they don’t have access to a grocery store. Those who get their food from a convenience store, for example, might have to choose white rice over brown rice because that is what is available.

“Families have to make really tough choices every single day about what they feed their families,” Reever said. “I think it’s better that kids go to bed with a full tummy than with no food at all. And I’m worried that by just adding on to the food bill, they’ll have to make some really impossible choices.”


Sen. Caryn Tyson, a Parker Republican who chairs the tax committee, took issue with mailers sent by Kansas Appleseed that urged support for eliminating the sales tax on food. Tyson’s complaint: The sales tax reduction passed last year applied to “groceries,” not “food.”

Tyson: “Your fliers were absolutely misleading, then, because you said remove it on food.”

Reever: “We called it the food sales tax.”

Tyson: “Yeah, which is misleading.”

Reever: “I thank you for pointing that out.”

The committee concluded the hearing on the sales tax bill in the morning, then met again over the lunch hour to consider other proposals. They included Senate Bill 169, an alternative to the Kansas Chamber’s proposed flat tax plan.

Under current law, the income tax rate is 3.1% for income under $15,000, 5.25% for income between $15,000 and $30,000, and 5.7% for income above $30,000. The dollar amounts are doubled for couples filing jointly.

SB 169 would eliminate the income tax for those earning less than $5,225 annually and apply a 4.75% rate to all others.

Critics of the flat tax compare it to former Gov. Sam Brownback’s “tax experiment” because it involves a dramatic sudden reduction in state revenue and disproportionately favors the highest wage earners.

“For the life of me, I don’t understand why the committee is going down this path,” said Sen. Tom Holland, D-Baldwin City. “We tried something very similar with the Brownback tax experiment. My concern is not only is it a more aggressive tax, once again, it’s really effectively reducing the tax rate for the wealthiest Kansans. The second thing is that we simply can’t afford this.”

Sen. Virgil Peck, R-Havana, said he wanted to “make sure it’s on the record” that the flat tax is different from legislation passed in 2012, which cut the rate for top earners and eliminated the income tax for businesses.

Peck said he supported the 2012 plan and believes it would have worked if the Legislature had controlled spending.

“That’s ancient history — or at least history, not ancient,” Peck said. “And so I just thought that I would mention that 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, for bringing business 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.

Kansas Reflector is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Kansas Reflector maintains editorial independence. Contact Editor Sherman Smith for questions: info@kansasreflector.com. Follow Kansas Reflector on Facebook and Twitter.

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