Gov. Kelly Pushes $450 Tax Rebate from Kansas, Vetoes Flat Tax Proposal

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Kansas taxpayers could get a tax rebate of up to $450 going forward if a new proposal from Governor Laura Kelly is approved. Governor Kelly introduced a proposal to send a one-time tax rebate from Kansas after vetoing a tax proposal that would have created a 5.15% “flat” income tax.

Why Does Kelly Favor A Tax Rebate From Kansas?

On Monday, Gov. Kelly vetoed a House Substitute for Senate Bill 169. The bill, if approved, would have overhauled the state’s tax structure to create a flat tax rate, which would have cost the state about $1.3 billion over the next three years, as well as put public education funding at risk.

“Our public schools were one of the biggest victims in the legislature’s last tax experiment and are one of the many services that would take a hit should this bill become law,” Gov. Kelly said.

In place of the flat-tax rate, Gov. Kelly announced using the one-time budget surplus on a tax rebate from Kansas of up to $450 to individuals and $900 for married taxpayers filing jointly. The one-time tax rebate from Kansas is estimated to cost the state $800 million.

“I’m calling on legislators to put this one-time surplus back in the hands of taxpayers — without risking our ability to continue fully funding schools and investing in roads, bridges, and essential services,” Gov. Kelly said.

Kelly argues that the one-time rebate would be more responsible as it doesn’t include future tax-relief commitments. Further, she noted that a flat tax rate would mostly benefit Kansans making more than $250,000 a year, while middle-class taxpayers would see less than $8 per month in actual savings.

Although a flat-tax rate could result in some savings, it could spell trouble for public school funding. Legislators have already proposed cutting this year’s K-12 Education budget to pay for the tax cut. The tax rate under the current tax structure ranges from 3.1% to 5.7%.

Legislature May Override The Veto

Kansas House Speaker Dan Hawkins objected to Gov. Kelly’s decision to veto the 5.15% “flat” income tax bill.

“In these times of economic uncertainty when Kansans need tax relief more than ever, it’s especially careless and out-of-touch for Governor Kelly to veto this broad, sustainable tax policy that provides tax relief to ALL Kansans,” Hawkins said in a statement.

Hawkins noted that the tax relief bill passed the House with a bi-partisan supermajority. The House Speaker is urging the legislature to override the veto. Republicans will need 84 votes in the House and 27 in the Senate to override the governor’s veto. Earlier this month, the proposal passed the House with an 85-38 vote and the Senate with a 24-13 vote.

Along with the flat tax rate, SB 169 calls for reducing the Social Security tax and residential property taxes exemption (from $80,000 to $60,000); tax relief for small businesses ($40 million in annual tax cuts for corporations), and ending the food sales tax faster (by Jan. 1, 2024).