Kansas Senate Committee Debates Tax Cuts and Business Subsidies
The Kansas Senate Committee on Assessment and Taxation recently discussed the potential shift in the state’s approach to corporate taxation and business incentives. Senate Bill 546 proposes a reduction in corporate income taxes from the current rate of 6.5% to 5.75% by 2026. Alongside tax cuts, the bill also suggests discontinuing two prominent business subsidies: Promoting Employment Across Kansas (PEAK) and High-Performance Incentive Program (H-PIP).
PEAK currently allows businesses to retain or be refunded up to 95% of the payroll withholding tax for new jobs created in Kansas. Similarly, H-PIP offers a 10% tax credit for capital investments over certain thresholds, with a 16-year carryforward if facilities requalify for the program.
During the committee meeting, Dave Trabert, CEO of the Kansas Policy Institute, highlighted research indicating that such tax subsidies may not effectively stimulate job growth or economic activity. He referenced a study by Nathan Jensen, which suggested that PEAK recipients were not more likely to add jobs than non-recipients. Trabert also cited Dr. Arthur Hall’s findings that STAR bond projects in Wichita merely shifted economic activity within the city rather than creating new growth.
Jonathan Leuth from Americans for Prosperity – Kansas (AFP-KS) expressed support for the bill, emphasizing the need for Kansas to remain competitive with neighboring states by reforming both corporate and personal tax structures.
However, not all testimony was in favor of the bill. Tim Henry of Great Plains Manufacturing and Kubota North America voiced concerns about the negative impact on businesses that have made long-term investment plans based on existing incentives.
Committee Chair Caryn Tyson and Sen. Molly Baumgardner raised questions about the uneven distribution of benefits from H-PIP, pointing out that many counties have never participated or have minimal participation in the program.
Sam Sackett with Sprint AeroSystems and Mitch Robinson with the Kansas Economic Development Alliance sought a balance between lowering corporate tax rates and maintaining incentive programs that protect and create jobs in Kansas.
The committee’s discussions reflect a broader debate on the best strategies for fostering economic growth and whether direct subsidies or broader tax cuts offer a more effective path forward for the state of Kansas.
