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1 Mark Robyn, Not in Kansas Anymore: Income Taxes on Pass-Through Businesses Eliminated 1 (2012)

handle is hein.taxfoundation/ffdacxz0001 and id is 1 raw text is: FONAINFiscal Fact May 29, 2012 No. 302 Not in Kansas Anymore: Income Taxes on Pass-Through Businesses Eliminated By Mark Robyn On May 22, Kansas Governor Sam Brownback (R) signed HB 2117 into law. This tax cut bill reduces income tax rates, increases the standard deduction, and eliminates some income tax credits. The legislation also exempts from tax some income of pass-through businesses. The tax reduction is estimated to be around $800 million annually beginning in 2014, totaling $4.5 billion over six years (see Table 1).1 By comparison, the state's individual income tax brought in $2.7 billion in 2011.2 The legislation also allows a previously planned sales tax reduction from 6.3% to 5.7% to take effect as scheduled. The sales tax was previously increased from 5.3% to 6.3% in 2010. The bill's evolution followed a strange path. The Senate, worried about the cost of the bill, had killed it in March. They then resurrected the measure hours later and passed it, in hopes of keeping the overall tax reform debate alive and negotiating a less costly tax cut package in a joint House-Senate conference committee.3 House members perceived the subsequent negotiations as failing, and on May 9, passed the original, larger tax cut legislation, sending to the governor's desk a bill that the Senate had previously quashed.4 Governor Brownback said that he would sign the bill, but also encouraged lawmakers to keep working toward a compromise if they were unsatisfied with the bill. Ultimately, no other compromise was reached, and the governor signed the bill into law. 1 For annual fiscal impact, see the legislative note for HB 2117, available at http://www.kslegislature.com/li/b2011_ 12/measures/documents/supp-note-hb2l17_04-O000.pdf. 2 U.S. Census Bureau, State Government Tax Collections 2011, http://www.census.gov/govs/statetax/. 3 See Brad Cooper, Brownback signs big tax cut in Kansas, KANSAS CITY STAR, May 23, 2012, http://midwestdemocracy.com/articles/brownback-signs-big-tax-cut-in-kasas/. ' See Chris Courtwright, Kansas Lawmakers Approve Income Tax Cuts, TAxANALYSTS: STATE TAX TODAY, May 11, 2012.