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Minutes for HB2394 - Committee on Taxation
Short Title
Increasing the amount of the research and development tax credit, expanding eligibility beyond corporate taxpayers and permitting transfer of the credit.
Minutes Content for Wed, Feb 16, 2022
Chairperson Smith opened the hearing on HB2394.
Adam Siebers, Assistant Revisor, provided an overview on HB2394 that increases the income tax credit percentage from 6.5% to 10% for amounts expended in the current research and development activities tax credit provided in K.S.A. 79-32,182b. (Attachment 1) Mr. Siebers stood for questions from Committee members.
Kathleen Smith, Kansas Department of Revenue provided an overview on the fiscal note for HB2394 stating the department is estimating it would decrease the State General Fund Revenues by around $1.02 million in FY2022 based upon the effective tax year 2021. To formulate the estimate, the department looked at historical data and figured it would probably increase 30.0 percent. Ms. Smith stated for a point of clarification in Paragraph (d) does the tax credit go away for tax year 2021 or 2022? Ms. Smith stood for questions from the Committee.
In response to a question, Ms. Smith noted for the 6.5 percent rate under the current statute for tax year 2018 there were 180 filers that claimed it for the credit allowed for $5.5 million. For tax year 2019, there were around 181 filers and a credit allowed for $2.6 million.
Proponents:
Hugh Carter, External Affairs, testified as a proponent for HB2394 on behalf of nearly 800 business members of The Chamber of Lawrence. He stated HB2394 would restore the research and development (R&D) tax credit to individuals, partnerships, S Corporations, limited liability companies, and other pass-through entities. He stated The R&D tax credits were removed in 2012 and then restored for C Corporations in 2017 and several Lawrence businesses would like to see this incentive restored for all companies. For the state GDP and potential job growth that was disrupted by the coronavirus pandemic and ongoing innovations, HB2394 would include every company in Kansas to participate in more research, development, and to incentivize that. (Attachment 2) Mr. Carter stood for questions from Committee members.
Curtis Sneden, President, Greater Topeka Chamber of Commerce, testified as a proponent for HB2394 stating it represents a fix and a visionary step forward. Topeka is sitting in the middle of what is called the animal health corridor from Manhattan to Kansas City. There is anticipation of explosive economic growth as the result of the National Bio and Agro-Defense Facility (NBAF) and the site of the global start-up accelerator, Plug and Play. (Attachment 3) Mr. Sneden stood for questions from Committee members.
Alex Boyer, Sustainability Specialist at Prosoco, Inc., testified as a proponent for HB2394 stating the company is a fourth generation family-owned manufacturer of specialty construction chemicals. Prosoco has just over 100 employees but is a nationally recognized manufacturer that is innovative, developing new products, and improving current products for better performance. (Attachment 4) Mr. Boyer stood for questions from Committee members.
Written testimony was submitted by the following as proponent for HB2394:
Kevin Walker, Overland Park Chamber, (Attachment 5)
Rachel Willis, Director of Legislative Affairs, Kansas Department of Commerce, (Attachment 6)
John Jenks, The Greater Kansas City Chamber of Commerce, (Attachment 7)
Chairperson Smith closed the hearing for HB2394.
