Lawmakers: Avoid budget cuts through tax reform

FRANKFORT, Ky. (WTVQ)– A group of state legislators filed tax reform legislation Friday that’s designed to help the state avoid proposed budget cuts.

The Legislative Research Commission says the tax modernization plan would boost state revenues by $570 million annually.

“We can’t make the investments needed for Kentucky to thrive unless we modernize a badly outdated and inadequate tax code,” said Rep. Jim Wayne, D-Louisville, who is a primary sponsor of the legislation along with Rep. Tom Burch, D-Louisville. “It’s time to give Kentucky a tax system that properly supports education, law enforcement, roads and infrastructure, environmental protection, health care, and programs to help our state’s most vulnerable citizens.”

The LRC says cosponsors of the legislation include: Rep. Jefferey Donahue, D-Louisville; Rep. Tom Riner, D-Louisville; Rep. Cluster Howard, D-Jackson; Rep. Kelly Flood, D-Lexington; Rep. Joni Jenkins, D-Shively; Rep. Mary Lou Marzian, D-Louisville; Rep. Derrick Graham, D-Frankfort; Rep. George Brown, D-Lexington; Rep. Reginald Meeks, D-Louisville; Rep. Gerald Watkins, D-Paducah; Rep. Darryl T. Owens, D-Louisville; and Rep. Rita Smart, D-Richmond.

It says the plan, which is officially known as House Bill 342, would raise some taxes while lowering others. Supporters say it’s designed to promote fairness while building a revenue base designed for today’s economy.

The LRC says, “Under the proposal, the state’s cigarette tax would increase by $1. A proposed state earned income tax credit would help remove $115 million worth of the annual tax burden for those eligible for the tax credits. A tax on certain services used primarily by the wealthy, such as chauffeured limousine rides, would be implemented to generate an additional $104 million annually.”

The reform plan includes measures to limit individual income tax itemized deductions, and make a small portion of retirement income taxable. It would freeze the state real property tax rate, and repeal the distilled spirits case sales tax.