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Minutes for SB22 - Committee on Senate Select Committee on Federal Tax Code Implementation
Short Title
Kansas itemized deductions, election, providing for deferred foreign income, global intangible low-taxed income, business interest, capital contributions and FDIC premiums income tax modifications.
Minutes Content for Wed, Jan 30, 2019
Chairperson Wagle continued the hearing on SB 22.
Katie Quinn, McDermott Will and Emery, spoke in support of the bill and discussed the differences between funds relating to IRC section 965 and those relating to Global Intangible Low-Taxed Income (GILTI). If Kansas does not take action to decouple from the federal tax rate cuts, corporate taxpayers in Kansas face a significant state tax increase. Ms. Quinn responded to questions from Committee members. (Attachment 1)
Morgan Scarboro, Multistate Associates, provided information regarding other states responses to the Tax Cuts and Jobs Act (TCJA). Seventeen states have decoupled from the two international provisions of the TCJA and only five have included it in their tax base. Failure to pass this law could have a negative impact on corporations who are considering expanding in or moving to Kansas. (Attachment 2)
Jason Watkins, Wichita Regional Chamber of Commerce, testified in support of the bill. While he is not a tax expert, the Chamber wants to be on record as supporting this bill. Failure to take action on the bill will result in a tax increase to individuals and corporations. (Attachment 3)
Alex Orel, Kansas Bankers Association, spoke in support of the bill and more specifically Section 3 of the bill regarding the deductibility of FDIC insurance premium costs. Passage of that section will ensure tax equity and that all banking institutions are treated fairly. (Attachment 4)
Patrick Vogelsberg, Kansas Association of Realtors, spoke in strong support of bill and specifically the areas that support itemized deductions. Private property ownership is fundamental to our society and home ownership should receive preferential treatment throughout our state policies including tax policies. Private ownership and the real estate industry as a whole is also important to the state's economy. Mr. Vogelsberg responded to questions from Committee members. (Attachment 5)
Don Brown, Cargill, spoke in support of the bill as Cargill and other U.S. multinational companies subject to Kansas' corporate tax would see a significant tax increase that would impede their ability to compete with foreign multinational companies. While Cargill is a global company, it has a strong presence in Kansas and they have 4,300 employees in diverse businesses across Kansas. Failure to pass this bill would put Cargill at a significant disadvantage with other multinational companies. Mr. Brown responded to questions from Committee members. (Attachment 6)
Michael Austin, Kansas Policy Institute, spoke as a proponent of the bill and more specifically for the provisions that allow Kansans to itemize on their Kansas returns regardless of the deduction taken on their federal returns. Profits motivate people to work hard for themselves. This bill would continue to allow Kansans to itemize deductions, which encourages investment. Let's not signal to other states and the world that it is relatively difficult to do business here. We need to send a message that hard work will be rewarded. (Attachment 7)
Eric Stafford, Kansas Chamber of Commerce, responded to questions from Committee members.
Chairperson Wagle drew members' attention to an article regarding the Seaboard Corporation that was distributed. (Attachment 8)
Chairperson Wagle continued the hearing on SB 22.
Chairperson Wagle adjourned the meeting at 10:23 am. The next meeting will be January 31, 2019.
