Opening bid from tax commission: $690 million; Will it be enough or too much for lawmakers?

12/06/2012 04:46 PM

Let the debate begin. Two lawmakers on the governor’s Blue Ribbon Commission on Taxes offered a bit of a preview of what legislators will likely be debating once they get the commission’s final report.

The plan, approved Thursday by the group of business leaders and education and health advocates, will be included in an official report by Dec. 15. It would raise about $690 million, the Courier-Journal’s Tom Loftus tweeted late Thursday afternoon.

Thursday, the group voted to recommended slight income tax rate cuts but bring in more money elsewhere, such as taxing a bigger chunk of retirees’ public pensions starting after $30,000 instead of the current $41,000 level.

Coming into Tuesday, the group already had settled on as much as $290 million in extra income from suggesting increases in taxes on cigarettes, closing come corporate loopholes and applying the state sales tax to certain services and utility payments.

Rep. Jim Wayne, D-Louisville, was among the commission members who urged the group to go big in terms of total revenue — at least $500 million and as much as $750 million a year.

“When you look at that (pension reform) and when you look at what’s happened to our schools, when you look at what’s happened to tuition rates, when you look at what’s happened to the strained social services, the strained prison system on and on and on – mental health services, Medicaid expansion this is not going to do it,” Wayne said.

But the whole commission did not share Wayne’s sentiment. Rep. Bill Farmer, R-Lexington, told Pure Politics the group wasn’t looking for a certain amount.

Farmer, who is retiring at the end of the year, is a non-voting member on the commission.

The last sticking point of the day was income tax rates. The commission voted for an Earned Income Tax Credit, Loftus tweeted. It would actually cost the state money from the coffers but would provide the lowest income residents with extra cash.

Kentucky currently taxes income on six brackets at rates ranging from 2 to 6 percent. Everyone in the state earning more than $8,000 is taxed at a 5.8 percent flat rate and those making more than $75,000 rare taxed at a 6 percent rate.

The commission, headed up by Lt. Gov. Jerry Abramson, must submit its final report to Gov. Steve Beshear by December 15, which could be cutting things close for action in the 2013 regular session, and Beshear hinted Wednesday that a special session could be needed for both tax reform and pension reform.


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