HB 566 passes through committee

After 10 years, the state EITC got its vote in Kentucky.

Madison County member Kim Stinson-Hawn got up early to listen to the school closings Wednesday.  As soon as she heard that she wouldn't be going to work that day, she got ready to come to Frankfort to testify on the Earned Income Tax Credit in HB 566.  Meanwhile, Northern Kentucky member Peter Meyer sandwiched a last-minute trip to Frankfort between travels from Northern Kentucky to Louisville and back to Northern Kentucky so that he could urge legislators to take this opportunity to tax the estate that he'll eventually inherit.  Thanks to the efforts of these members, ten years' worth of efforts from members and allies to build support for fair taxes, and Rep. Wayne's work with the committee chair, the House of Representatives now has an opportunity to pass a measure to make our tax system more fair with an EITC. 

HB 566 is a bill filed by Rep. Wayne and co-sponsored by Rep. Moberly.  It contains versions of two parts of KEJA's and Rep. Wayne's HB 262: a restored estate tax with an exemption level of $3.5 million and a 7.5% refundable state Earned Income Tax Credit.  The committee substitute exempts family farms and enacts the measure in 2010, when the state will start to see revenue from the estate tax. 

During the hearing, Rep. Moberly said, "I want to make sure that people understand what we're doing here.  It's a clear philosophical question: Do you want to tax estates over $3.5 million to give this credit to working people?"  Rep. Keith Hall from Pikeville answered by thanking Rep. Wayne for working on this bill. Looking at Stinson-Hawn, Hall said, "Kim, I'm on the *right* side this time.  I'm on your side." adding that he "can't wait to vote yes."   There was one vote against the bill, and one abstention, but the bill passed easily.

And this is a bill that should pass easily.  It only taxes a handful of estates, and only on their worth over and above $3.5 million.  Meyer told the committee, "I stand to inherit an estate, the vast majority of which has never been taxed. The luck of my parents accounts for the bulk of their estate. That estate even grew this year by 20% since I testified on January 22 of this year, and it has never been taxed.  It should be."

Further, the EITC in HB 566 will help more than 350,000 Kentucky families, that, like Stinson-Hawn's, are working hard to make ends meet.  Stinson-Hawn has a job that requires her to drive over a 5-county area in southeastern Kentucky, so it's essential to keep her 10-year-old car running.  "If this bill passes, the tax credit would go towards fixing the clutch in my car, which I need to help me keep my job," Stinson-Hawn testified. "There are so many needs and challenges that families like mine face."

A state EITC would help with these needs and challenges.  As it is, our tax system unfairly taxes lower-income Kentuckians.  The state EITC would help correct that unfairness.  And new research mentioned by KYA points out that .97 of every dollar of an EITC is funneled right back into the local economies of qualified families.  It's hard to imagine how a legislator would object to this bill.

Speaker Jody Richards, however, does object to this bill, citing that he is "afraid" of restoring the estate tax on estates worth more than $3.5 million, despite the help to the 350,000 families that would benefit from the credit.