The 2017 Tax Cuts and Jobs Act (TCJA ) made some significant changes to how foreign business income is taxed. It introduced a new category for any new income that international companies earn, called GILTI. GILTI stands for Global Intangible Low-Tax Income. The TCJA provided that GILTI would be taxed at a corporate tax rate of 21%. However, it also provided that certain C corporations could deduct 50% of their GILTI tax, which resulted in an effective corporate tax rate of 10.5%. In addition, C corporations can claim a foreign tax credit, substantially reducing the US federal income tax due. This was a significant reduction from the previous 35% corporate tax rate, and substantially lower than the new 21% GILTI corporate tax rate.

Forever on the lookout for another way to cut taxes, the Republican majority in the Kansas legislature proposed SB 22. It provided that C corporations should also get the GILTI tax breaks on their Kansas taxes. The Department of Revenue estimated that SB 22 would decrease State General Fund revenues by $329.1 million in FY 2022, $144.6 million in FY 2023, and $146.4 million in FY 2024. Given that the Department of Revenue does not have data to make precise estimates for some of the tax policy changes, they said the bill’s fiscal note would likely be higher. Even though the GILTI corporations had already received a significant Federal tax break, Kansas was under no obligation to give them further tax breaks. It was obvious SB 22 would put a serious strain on future budgets. Even though Democrats and some moderate Republicans spoke and voted against the bill, SB 22 passed with a large Republican majority. 

Never ones to be concerned about fiscal responsibility, many Kansas Republicans are unlikely to feel guilty about passing GILTI. So, we will dedicate this cartoon to them to remind voters of that.

This was written in 2022 and recently edited.