Kansas House Bill HB2110

Kansas 2023-2024 Regular Session

• Introduced: 1/19/23
• Refer: 1/19/23
• Failed: 4/30/24

Caption

Allowing single sales factor apportionment of business income for certain taxpayers.

Impact

The bill is expected to have a substantial impact on various state taxation statutes, particularly K.S.A. 79-3271 and K.S.A. 79-3279, as it replaces the existing provisions with a focus on sales factor apportionment. Supporters argue that adopting a single sales factor will lower the tax burden for businesses heavily invested in their workforce, particularly those in manufacturing and service industries, which could lead to increased job creation and economic growth in Kansas. Conversely, opponents have raised concerns about the potential revenue losses for the state, as some may fear that such tax incentives could dilute the overall tax base if not balanced with broader fiscal strategies.

Summary

House Bill 2110 introduces significant amendments to income taxation in Kansas, specifically regarding the apportionment of business income. The bill allows certain taxpayers the option to elect for a single sales factor apportionment method. This transition from the traditional three-factor apportionment (which considers property, payroll, and sales) to a single sales factor apportionment is aimed at making it easier for businesses to calculate their tax liabilities. By simplifying the apportionment process, the bill seeks to enhance the business climate in Kansas and attract more companies to the state.

Contention

Key points of contention surrounding HB 2110 center on its potential long-term implications for state revenue and equitable tax practice. Critics argue that while the goal of attracting businesses is commendable, a sole emphasis on sales factor apportionment could disadvantage industries that have significant property or payroll costs. The question remains whether this approach will foster sustainable economic growth or simply shift tax burdens. Some lawmakers are concerned about the size of businesses that will benefit from this new structure, as it may disproportionately favor larger corporations while overlooking smaller local businesses.