- Associated Press - Monday, March 14, 2016

TOPEKA, Kan. (AP) - A Wichita legislator is trying to persuade his colleagues to roll back a tax exemption for some Kansas business owners in order to reduce the state’s sales tax on groceries.

Republican Rep. Mark Hutton has proposed a bill that would do away with an income tax break for owners of limited liability companies and use the extra revenue to lower the state’s sales tax on groceries, The Wichita Eagle reported (https://bit.ly/1TIXTOE ). The bill is scheduled for a hearing Tuesday before the House Taxation Committee.

The Kansas Department of Revenue estimated that removing the tax exemption would raise about $261 million. That would allow the state to lower the sales tax on groceries to between 2.6 percent and 2.9 percent. Kansas currently taxes groceries at 6.5 percent, the second highest in the nation, and that can increase to as much as 10 percent with local sales taxes on unprepared food.

Hutton led a coalition last year that tried to remove the same income tax exemption. That effort stalled when Gov. Sam Brownback, who pushed the exemption as a way to attract businesses to Kansas, threatened to veto any bill that contained the provision. The Republican governor has made similar comments this session.

Hutton said his bill is designed to start a conversation about the food taxes and the special exemption for some businesses. He acknowledged using the revenue from ending the LLC tax break to lower grocery sales taxes wouldn’t address the state’s financial problems, but he said it would make the state’s tax system fair to everyone and could spur economic growth.



As the owner of a construction firm, Hutton benefits from the business income tax exemption while his employees pay state income tax on their wages. He said he’s spoken to several business owners who are “uneasy with this arrangement and believe that is kind of a slight to our employees.”

“One of the arguments with the whole business-income exemption was that it put more money back into the economy. This is money that business owners had that they could then spend on their businesses,” Hutton said. “I believe discounting the sales tax (on groceries) and putting that money back into everybody’s pocket will actually be a more direct path for those funds to get back into our economy.”

___

Information from: The Wichita (Kan.) Eagle, https://www.kansas.com

Sign up for Daily Newsletters

Copyright © 2019 The Washington Times, LLC.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide