WICHITA, Kan. (KSNW) – The new tax plan is on the way. Governor Sam Brownback vetoed a tax plan that would bring in $1.2 billion over the next two years. But, last night, lawmakers got enough votes to override the governor.
“The challenges of tax? The bottom line is most of us in this profession are here to help people,” says Jim Dunning Jr., of Dunning & Associates CPAs. “And part of everybody’s objective I think is to keep as much money in their pocket as possible, take advantage of deductions, both legally and ethically.”
Dunning says he was watching closely to see if lawmakers would get an override of the governor’s veto of the tax plan.
Business owners were watching closely as well.
“Well, I’m just really not sure how well the tax breaks that we were getting were actually done,” says Denny, owner of Old Town Automotive in Wichita. “It seems to me we have an issue where people got into LLC’s and were able to get substantial tax breaks and corporations or S-corporations jumped on the LLC bandwagon. And the state lost a lot of money.”
Denny says he was not one of those that became an LLC to take advantage of no state income taxes. But, he says, businesses who did, will now have to raise rates to stay at their same profit margins.
“Well, the big issue that we are going to have to do if taxes go up is we are either going to have to do more business or raise prices,” says Denny.
Those tax experts agree. Dunning Jr. says businesses will now have to consider raising rates or eating the difference.
“So, if my profits just went down 5 percent (because of new taxes) I need to consider raising my rates at least 5 percent to maintain the level of where I am,” says Dunning Jr. “Because when your utility rates go up, or the cost of paper or wages, or we increase the wages of our staff, that has to come from somewhere.”
Personal tax rates are on the way up as well as the new tax that has been reinstated on businesses.
A single person making about $35,000 a year will pay $227 more in state taxes annually. A couple making $40,000 a year will pay about $215 more annually. And a couple making $80,000 a year will pay an extra $565 annually.
Dunning Jr. says he watched lawmakers this year, more than ever.
“This one (legislative session) I did follow a little more closely because you get the feeling, something just had to be done,” says Dunning Jr. “The (Kan. Supreme) courts have ruled that we are under-funding schools, we continually have shortages on our (state tax) collections and we are behind. The state coffers are empty and running behind, and I didn’t know if the Senators and representatives could muster a veto.”
Lawmakers did override the Governor veto. The new tax changes become law, July 1.