(The Center Square) – Due to federal tax policy, Kansas expects to lose $ 360 million in tax revenue over the next three years.
Richard Auxier of the Urban Institute and the Tax Policy Center told The Center Square that this was related to the Paycheck Protection Program (PPP) loans.
“In an attempt to help businesses, Congress said that not only is PPP not an income, but can still be a deduction with the payroll it supports,” Auxier said. “This is great for businesses because it cuts taxes but costs [the state tax] Revenue. That’s fine at the federal level because they can make funding deficit. At the state level, it is more difficult because of the balanced budget requirements. “
Michael Austin, director of the Sandlian Center for Entrepreneurial Government at the Kansas Policy Institute, told The Center Square that corporations should not pay federal income taxes on these loans and should not pay federal income taxes on expenses made through these loans. Kansas tax law means Kansas companies automatically pay less federal and state taxes, he said.
“These loans are designed to keep those businesses alive and invest,” Austin said. “Kansas is making these companies pay higher taxes because they refuse to eliminate wasteful programs.
That forecast is a sobering change from recent years in Kansas’s above-projected tax revenues as a result of the 2017 tax reform. Tax revenues were better than projected for eight consecutive months.
The state legislature will meet on April 20 to discuss budgetary issues. Governor Laura Kelly said she was reluctant to resort to policies that would return Kansas to a state of chronic budget constraint.