Beshear taps Abramson as leader of group to suggest tax code changes by end of 2012

01/05/2012 11:39 PM

It’s tax task force time again.

Gov. Steve Beshear announced he would bring together business leaders, tax experts and policy makers from across the state to propose — potentially by the end of the year – changes to the tax code.

“We need a tax system that provides adequate revenue to fund critical state services. Our tax system isn’t doing that,” he said.

Lt. Gov. Jerry Abramson will head up the blue ribbon task force, which Beshear said would be the 10th such review of the revenue system in the last two decades.

Beshear made the announcement at the state’s Chamber of Commerce dinner in Lexington Thursday night to a packed house of business leaders, lobbyists and legislators. But he quickly added that the task force won’t be a bunch of government insiders.

“Let me assure you. This effort will not succeed if it is an insular, Frankfort initiative. We need the public at large to not only recognize the need for tax reform but also to buy in to any eventual solution,” he said.

Beshear also said he will hire a consultant to look at what other states do with their tax codes to ensure fairness and promote business competitiveness.

“Furthermore, the task force will hear from experts in accounting, private sector finance, tax and business and other areas,” Beshear said.

He laid out his five directives for the task force:

- Ensure a system that “treats everybody equitably.” Kentuckians in the highest personal income bracket pay 6 percent. And some have suggested raising that rate to 7 percent for the wealthiest Kentuckians. But in an interview after his speech, Beshear said he didn’t want to prejudge the task force’s work. – Increase Kentucky’s ability to lure companies and jobs. “The commission will review how Kentucky compares to other states regarding business taxes and identify ways to improve our business tax competitiveness,” he said. – Make sure the tax system is simple and easy to follow. – Try to make Kentucky’s tax code more “elastic” in order to grow revenue when the economy is humming on all cylinders. – And ensure that it provides the necessary revenue for funding programs and projects.

After the speech, Beshear declined to say whether he will push for a specific approach, such as expanding the sales tax to services:

Lawmakers of both sides of the aisle said they were glad to see the governor move forward to push for tax reform.

“I think that’s the right way to go,” said Rep. Rick Rand, D-Bedford and chairman of the House budget committee as he left the dinner.

Earlier in the night, House Republican Leader Jeff Hoover, R-Jamestown, said Kentucky needed action on tax reform – not another blue ribbon commission.

But after hearing the governor’s remarks, Hoover told Pure Politics that he was glad to hear the governor wanted a diverse, broad-based group of experts.

“I’d rather go ahead and get some specific ideas on the table in this session but at least this governor is taking a very positive step,” Hoover said. “If we can get a broad-based task force, complete the work by the end of the year, that’s a good step. That’s more than we’ve done the last few years.”

Republican Senate President David Williams called for a task force to rewrite the tax code as part of his platform when he ran against Beshear in last year’s governor’s race. Williams left the dinner without doing any interviews last night.

In his speech to the chamber before the governor’s remarks, Williams urged leaders to look for policy changes to “grow our way out of this.”

He offered more criticism of the Kentucky Chamber of Commerce than Beshear on Thursday night. He said the chamber is wasting its efforts supporting Beshear’s push for a constitutional amendment.

“You should be a pro-business chamber. You need to talk about the things that matter,” he told the chamber’s leaders.

As for Beshear, Williams suggested that the governor misled Kentuckians during the campaign by understating the true financial picture of the state. But he turned to the governor early in his remarks and said he’s hopeful Beshear’s second term will go well.

“Governor, I say this with all sincerity – I hope after the four years you serve, that I can reflect upon it and say that you’re the most successful governor that the commonwealth has ever had,” Williams said. “That’s what every Kentuckian should say.”

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