HB 142 – believing we can move Kentucky forward

Legislators can move Kentucky significantly forward by giving serious consideration to comprehensive tax reform legislation introduced by Rep. Jim Wayne on Tuesday.

“The reality is … we are in a state of fiscal crisis,” Wayne said, adding that his intent is “to begin the debate during this session ... and start educating the legislators and the general public about the crisis.”

House Bill 142 would raise about $800 million in new revenue, mostly by tapping income and transactions that now go untaxed. That includes extending the sales tax to about 15 services and lowering to $35,000 per person the exclusion for pension income.

He pointed out that the bill would decrease taxes on the lowest incomes, primarily through a refundable Earned Income Tax Credit.

KFTC members joined Rep. Wayne at the press conference, with Becki Winchel delivering a statement on behalf of KFTC’s Economic Justice Committee. She reminded those present that, “Our state budget is one of the best means we have for moving Kentucky and its people forward.

“Rep. Wayne’s proposal is a real solution that addresses critical needs of Kentuckians that have gone unmet for too long, and we’re happy to support this bold plan to reform our taxes in a way that makes the system more fair and responds to our critical revenue needs.

“For KFTC members, our support is based on a vision; a vision that Kentucky can become a great state, if we want that and are willing to make the investments necessary to bring that about.”

Later in the day, Mary Lassiter, the governor cabinet secretary, painted a grim budget outlook for members of the House and Senate appropriations and revenue committee. She said, “without change, if we do nothing, [there will be] a $1 billion gap by 2020, in addition $1.6 billion already cut the last 5 years.”

The impact of those cuts include 73,000 students who qualify for financial aid but don’t get it, 300,000 fewer meals provided by Meals on Wheels than in 2010, fewer state police, 60% cuts to school safety programs, and a long list of other that “have done damage to our commonwealth,” according to Rep. Wayne.

HB 142 incorporates all the provisions of the Kentucky Forward Plan tax reform legislation Wayne sponsored last year, and many of the recommendations of the governor’s Blue Ribbon Commission on Tax Reform. It differs from those recommendations when it comes to corporate taxes, however. Instead of further reducing corporate taxes by $130 million, as the commission recommended, Rep. Wayne wants them to contribute proportionately to helping move Kentucky forward.

“More corporate tax cuts are not the path to greater prosperity,” pointed out Jason Bailey with the Kentucky Center for Economic Policy.

Download a HB 142 handout or a bill summary.