Democratic senators grilled proponents of corporate tax reform Wednesday in a quest to unveil the names of companies that will benefit from proposed legislation and how much money is at stake.
Lawmakers are wrestling with the implications of federal tax code changes for businesses with multinational profits. Senate President Susan Wagle, R-Wichita, is spearheading efforts to rewrite state law and disburse additional savings.
Don Brown, government relations director for Cargill, said failure to pass Senate Bill 22 would place the company at a competitive disadvantage with its overseas rivals. The bill would remove offshore profits from the Kansas tax equation.
"So you normally have a small Kansas tax liability, and now it's bigger?" said Sen. Vic Miller, D-Topeka.
"No," Brown said, "I don't think it's small."
Miller asked if that means Cargill used to pay $10 million and now is in danger of paying $11 million.
"I just need to get some idea of the impact that these particular provisions have on your overall tax bill so I can evaluate, in my view, whether it's a significant increase or what extent it is an increase," Miller said. "Can you help me?"
Brown said he preferred not to reveal the company's tax liability in Kansas.
"Well, then," Miller said, "your testimony is of no help, but thank you."
Under changes in federal law, previously sheltered foreign earnings are now being taxed in exchange for a dramatic lowering of the overall tax rate. Because Kansas tax rates are applied to federally taxable income, the state could see an unexpected "windfall" in revenue from money made in other countries.
Wednesday marked the second day of testimony for those who support tax reform, which is estimated to deliver $137 million in savings to corporations.
Miller and Sen. Tom Holland, D-Baldwin City, the Democrats assigned to the nine-member panel handling the issue, say the potential for higher taxes in Kansas is dwarfed by the money businesses will save through federal cuts.
Kathleen Quinn, a tax attorney from a New York City firm, said a failure to provide tax relief on foreign income will raise constitutional challenges.
"As this gets rolling and audits come up and stuff like that, there is going to be real money for taxpayers, so we expect there to be a lot of litigation," Quinn said.
She refused to identify for Holland any Kansas clients. She said she had no information on how much money businesses saved under federal cuts or would save under state cuts.
Holland said Cargill and other businesses that would benefit from tax reform already have received investments from Kansas through economic incentive programs.
"You guys could still decide to take off anyway, right?" Holland said. "Regardless of what we do here, theoretically, you could still take your business elsewhere."
"This committee," he added, "is hung up on its shorts about if we don't do this, people may leave."
Brown said the company will stay in its new $70 million headquarters in Wichita.
"This is not going to chase us out of Kansas," Brown said.
Miller said his endeavor was to find out which companies will benefit from the tax bill. So far, he said, he knows of Cargill, Pfizer and Seaboard Corp.
Wagle said Spirit AeroSystems and AT&T were among the "large number of companies" on the list.