IMMEDIATE RELEASE
Feb. 12, 2007

Topeka – The Kansas House of Representatives gave tentative approval today to House Bill 2031, a bill that will repeal the state’s franchise tax over a three-year period.

“I am pleased the House Republican Caucus’ plan to do away with our state’s franchise tax is moving forward,” House Speaker Melvin Neufeld (R-Ingalls) said. “It is what I call a “triple tax” – taxing Kansas businesses that have already paid income tax and property tax on their companies’ assets. I can’t think of a better way to help our state’s economy then leaving the money in the pockets of business owners and farmers who will then use it to invest in their businesses and hire more workers.  The long-term economic impact far outweighs any short-term belt-tightening we might need to do to outset the repeal.”

Currently businesses whose assets are valued at less than $100,000 are exempt from paying franchise taxes.  The three-year repeal increases the assets exemption to $3,000,000 this year, then in 2008 reduces the tax rate from .125% to .0625%, and eliminates it completely in 2009.

Repealing the franchise tax is part of the House Republican Caucus’ 2007 Legislative Agenda. 

“Despite the Democrats’ efforts to steer away from sound policy, House Republicans fulfilled our pledge to provide tax relief for business and to promote capital in Kansas,” said Majority Leader Ray Merrick (R-Stilwell).  “This is the first piece of a comprehensive package addressing our overtaxed businesses and property owners in Kansas.”

Rep. Richard Carlson (R-St. Marys) brought the bill before the house for debate.

“I am pleased with the debate today,” Rep. Carlson said.  “It is important that we provide incentives for capital to stay in Kansas.  I am proud of the House’s strong stance on repealing the franchise tax and am confident we will see relief for businesses this year.”

The House Taxation Committee heard from business owners and representatives from across the state in support of repealing the tax.

“This three-year repeal will make our state more competitive in the global market,” Taxation Committee Chairman Kenny Wilk (R-Lansing) said. “Our state’s franchise tax is a $44 million burden on Kansas businesses many other states don’t have.  Eliminating the tax will benefit not only the businesses but also Kansas workers and the state’s economy.”

House members will take final action on House Bill 2031 tomorrow.

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