The Kansas House gave preliminary approval to a bill abolishing the corporate franchise tax over three years.
The tax brings in $44 million a year for the state.
Proponents say eliminating the tax will give businesses an advantage and make Kansas more attractive to new investment. They argue that loses to state coffers will be compensated by economic growth caused by eliminating the tax.
The tax, paid by businesses on a percentage of their net worth, would be eliminated over three years. Now, companies are taxed .125 percent of their net worth. Companies with a net worth of $100,000 or less do not pay the tax. The tax is capped at $20,000.
In year one, the bill would raise the exemption to $3 million, meaning businesses with a net worth of less than that would not have to pay the tax.
In year two, the franchise tax rate would be cut in half. In the third year, the tax would be completely abolished.
The House is set to hold a final vote on the bill, HB 2031, Tuesday. Then it moves to the Senate.
Read more in tomorrow's Star.
Posted by David Klepper