Kansas committee hears bill to let counties levy up to 1% earnings tax to offset property taxes

At a Senate Tax Committee hearing on Senate Bill 108, proponents including state and local officials said the bill would allow counties to place on the ballot a county earnings tax of up to 1% and use all revenue to reduce property taxes; opponents said the change would shift tax burdens, add administrative complexity and risk volatile revenues.

The bill "would authorize counties to impose an earnings tax upon individuals employed or working in such county," Amelia Donahue told the committee in an opening explanation of the measure. Donahue said the tax would apply to "salaries, wages, commissions, and other compensation" earned for work performed in the county, would exclude contributions to deferred compensation plans if those contributions are not subject to Kansas state income tax, and would be capped at 1% per year. She said the measure requires that the revenue "be pledged for general county purposes, and all of the revenue derived from the earnings tax shall be credited in the budget of the county to reduce the amount of revenue otherwise necessary to be raised from the Ad Valorem property tax." She added that the ballot question must be resubmitted every five years to continue the levy.

Supporters: local officials and county leaders argued counties with large nonresident workforces would benefit

Senator David Haley, one of the bill's sponsors, told the committee he was "excited about this" and said the measure would be especially valuable to Wyandotte County, where he said a large share of wages are earned by nonresidents. "I don't know the mechanics exactly, but [revenues] in total [would…