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.”
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.”
