Rep. Jim Wayne, outside groups advocate for tax reforms as legislature faces austere budget

02/08/2016 03:27 PM

Gov. Matt Bevin’s budget has met early opposition in the state House as lawmakers ponder just how postsecondary institutions and other cabinets in government will handle another round of budget cuts

In an effort to endure $650 million in budget cutbacks, and better fund the state pension systems, Rep. Jim Wayne, D-Louisville, is once again advocating for tax reforms, which he says could generate $570 million annually.

In a floor speech on Friday, Wayne announced that 14 House members had filed House Bill 342, which would raise some taxes while lowering others. Wayne argued that Bevin’s budget cuts also amount to “hidden tax increases” as funds were swept from state workers and sent other places.

The legislation heavily relies on the 2012 Blue Ribbon Commission on Tax Reform headed by former Lt. Gov. Jerry Abramson. That commission used six principles when considering how to revamp the tax code: fairness, competitiveness, adequacy, elasticity, simplicity and compliance.

Within the legislation proposed by the 14 House members, includes a hike on the state’s cigarette tax which would increase by one dollar. The group also includes a state earned income tax credit EITC, which would help remove $115 million worth of the annual tax burden for those eligible for the tax credits, according to an LRC report.

In an effort to broaden the tax base, the group also returns to an item from the 2012 report by including a tax on luxury services, like chauffeured limousine rides and dry cleaning, which would generate an additional $104 million annually, according to the LRC.

The idea of reforming the state’s tax code is being championed by Kentucky Together, a coalition of education, economic, health and other organizations focused on “increasing revenue in Kentucky and building thriving communities that benefit everyone,” according to a press release.

Recently, Jason Bailey the Executive Director of the Kentucky Center for Economic Policy, and one of the members of the 2012 Blue Ribbon Commission on Tax Reform talked about the need for tax reforms as an offset to Bevin’s austere budget.

Bailey laid out the impacts of the cuts to programs and education in the state, and the need to pay down the state’s pension debt.

Watch the interview below for more on Bailey’s ideas on tax reforms and the likelihood for comprehensive reform taking place in 2016.


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