Kentucky’s Blue Ribbon Tax Commission led by Lt. Gov. Abramson just completed its work and issued a series of recommendations to revamp Kentucky’s tax code. A number of these recommendations will impact businesses. Some Kentucky-based businesses will benefit from the proposed changes; others may see their taxes increase. The Kentucky Chamber needs your help to evaluate these proposals and better represent you in Frankfort.

Please take a few minutes to complete a brief survey and make your voice heard on business taxes.

Question Title

* 1. For verification purposes, please enter your email address.

Question Title

* 2. What is the size of your company's workforce in Kentucky?

Question Title

* 3. With which industry does your company most strongly affiliate?

Question Title

* 4. Kentucky, like many other states, has experienced budget difficulties during the past several years. How should Kentucky balance the state budget?

The Blue Ribbon commission made several proposed changes to the tax code. In order to best represent your views, we need to hear from you. Please indicate below whether you FAVOR, OPPOSE or have NO OPINION regarding the following 15 proposed tax changes?

Question Title

* 5. Raise the cigarette tax from $0.60 per pack to $1 per pack? (Adds roughly $100 million to fund state programs)

Question Title

* 6. Provide a tax credit to offset inventory tax on stored bourbon barrels to help Kentucky’s signature bourbon industry.

Question Title

* 7. Revamp how corporate taxes are calculated so businesses are only taxed on in-state sales, rather than adding additional tax burden based on number of employees and investment and lower the top rate from 6% to 5.8%. (Saves in-state employers $119 million annually)

Question Title

* 8. Limit deductions against personal income taxes to $17,500 and reduce income taxes slightly so the top rate is reduced to 5.8% from the current 6% as shown in table below. Limiting deductions increases state revenue by $350 million; lower rate structure below reduces taxes by $219 million. (Net increase of $131 million)
$0-$3000 -- Current: 2% Proposed: 2%
$3001-$4000 -- Current: 3% Proposed: 3%
$4001-$5000 -- Current: 4% Proposed: 3.5%
$5,001-$8,000 -- Current: 5% Proposed: 4.50%
$8,001-$75,000 -- Current: 5.80% Proposed: 5.50%
$75,001 and over -- Current: 6% Proposed: 5.80%

Question Title

* 9. Add a one percent tax on utility bills for individuals and businesses. This $100 million in additional taxes would be dedicated to school funding.

Question Title

* 10. Provide a refundable earned income tax credit (EITC) for low-income workers. This would reduce state revenues by roughly $115 million by appropriating tax refunds of 15% of federal credit.

Question Title

* 11. Extend the sales tax to a number of currently untaxed services. While the commission did not identify the specific services, much of the discussion suggested the services would include dry cleaning, armored car services, limousine service, golf club fees, appliance repairs, lawn services and other household services. Depending on the services chosen, this could increase state revenue by $106 million to $176 million.

Question Title

* 12. Lower the limited liability tax exemption from $3 million to $1 million for small businesses. This will broaden the base by requiring approximately $14 million more from small companies with $1 million to $3 million in gross revenues.

Question Title

* 13. Implement an angel tax credit to spur investment in homegrown small businesses.

Question Title

* 14. Exempt the sales and use tax on certain equine products to support the signature equine industry. ($14 million exemption for horse industry)

Question Title

* 15. Provide a tax credit to encourage parents to invest in 529 college savings plans for their children.

Question Title

* 16. Amend the pension income exclusion from $41,110 to $30,000, and phase out the exclusion for total income over $30,000. This proposal would tax all retirement income over $30,000 and raise roughly $485 million for state programs. Some argue this will help fund the state pension liability and suggest that under the current tax structure, a retired couple has the ability to shield approximately $100,000 annually from any state income tax.

Question Title

* 17. Eliminate the export credit under the minerals severance tax. This would increase state revenue by $2.2 million, but would impact in-state companies that sell a majority of their severed minerals out of state.

Question Title

* 18. Impose the pari-mutuel tax on advance deposit wagers made on live races conducted at Kentucky racetracks. ($6 million increase in state revenues)

Question Title

* 19. Freeze the state property tax at $0.12 per $100. This would initially lower state revenues by $8 million, but would allow moderate growth in the tax collected over time as property values increase.

Question Title

* 20. Amend Kentucky’s Constitution to allow local communities to impose a “local sales tax” in which an additional sales tax would be placed on top of the state’s 6% sales tax. The proceeds from the additional tax would be retained within the local community.

Question Title

* 21. The economists hired by the commission suggested a way to make Kentucky more competitive would be to shift from income taxes (individual and business) to more consumption taxes (sales taxes). Do you think the commission should have made more progress toward this goal?

Question Title

* 22. If you could reduce the burden of one tax more than any other, what would you reduce or eliminate?

Question Title

* 23. Overall, as a total tax package increasing state revenue by $690 million with some taxes going up and others being reduced, would you support or oppose the overall recommendations of the tax commission?

Thank you for your time. Your opinion is very important to us and helps our team of business advocates in Frankfort work toward a positive, pro-growth business environment. We appreciate your support to make Kentucky a place for economic growth and opportunity.

T