Democratic KY women's group to push for tax changes to services and a new bracket on the rich

11/21/2011 05:26 PM

Kentucky needs to spread its sales tax to services and add a new income tax bracket for the highest earners, according to a policy group that presented its plan to a Democratic women’s organization this weekend.

Many of the recommendations presented by the group of progressive activists and attorneys have been debated before in some fashion, such as adding the 6 percent state sales tax to services.

Other recommendations presented at the Women’s Network meeting Saturday include:

  • Raising the state’s taxes on cigarettes further
  • Considering abolishing the inventory tax on businesses
  • Imposing expiration dates on all tax credits, loopholes and tax breaks

But one Democratic lawmaker said at Saturday’s forum that, at best, the debate over Kentucky’s tax code could get started in the General Assembly next year but that it’s unlikely any plan can be approved.

“We lack courage, quite frankly, as a body to take on this kind of tough issue in an election year,” said Democratic Rep. Carl Rollins of Midway.

In addition, crafting the next two-year state budget and redrawing the legislative and congressional district lines will take up most of the oxygen of the session, leaving little time, energy and political capital for tax reform, he said.

The newest wrinkle the group offered was the suggestion of a new income bracket.

Currently most Kentuckians making $10,000 a year or more pay a flat 6 percent state tax.

That means low-income Kentuckians are paying a higher percentage of their earnings to the state, said Col Owens, a Northern Kentucky Democrat and chairman of the Commonwealth Institute for Policy Issues and Civic Engagement that made the recommendations.

Owens, the group’s chairman, said the proposal for a new tax bracket would be slight increase on the rich. Here’s what he, the other economists and conservative economist Paul Coomes from the University of Louisville — who wasn’t a part of the group or Saturday’s event — had to say about Kentucky’s tax code:

Leaders of the Women’s Network said they planned to lobby the General Assembly for those changes recommended by the study group.

Those discussing the tax recommendations included Owens; Joan Gregory, a study group member; Lawrence Lynch, a Transylvania University economics professor and chairman of the Kentucky Consensus Forecasting Group that makes assessments on state revenue; Jason Bailey, executive director of the progressive-leaning Kentucky Center for Economic Policy; and Rollins, the chairman of the House Education Committee.

The General Assembly could take up tax reform during the 30-day session in 2013 but would require a two-thirds majority approval in each chamber to pass any revenue measure.

But the governor could call a special session to handle the matter, in which case a simple majority would be needed.

Tax reform was a subplot of the 2011 governor’s race. While Democratic Gov. Steve Beshear said now is not the time to take it up with the economy still weak, Republican challenger David Williams called for eliminating the state income taxes and spreading out the sales tax to take the place of that revenue.


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