Wayne and another non-voting member of the commission, retiring Rep. Bill Farmer, R-Lexington, have been leading voices in the General Assembly for tax reform, though Wayne prefers a more progressive system to generate more funding for education and health and welfare programs while Farmer’s concerns have been aimed more at business competitiveness.
Wayne noted the changes to the corporate tax code, if enacted, would reduce business taxes by about $102 million or about one-fourth of what the state now collects in corporate taxes. He said those changes make Kentucky “clearly competitive” with surrounding states.
Wayne said the changes will “help the poor slightly” while asking the middle class and wealthy to pay a bit more. But, he said, it’s still not as fair a system as he’d like, one which would require a larger percentage of taxes from those with the most ability to pay and produce more state revenue.
Recommended changes are to lower the top corporate and individual tax rate from 6 percent to 5.8 percent; cap deductions at about $20,000; and tax retirement benefits and income over $30,000 at a one-to-one rate – the deduction would be lowered $1 for every $1 over $30,000 of total income.
All those changes are calculated to bring in approximately $501 million more in state revenues.
State property tax rates would be frozen at 12 cents per $100 of assessed value. Cigarette taxes would rise to $1 per pack and other tobacco products would be taxed at 22.5 percent. A 1 percent state tax would be assessed on utilities. The six percent sales tax would be extended to some unspecified services.
The commission is also recommending a constitutional amendment to allow cities to enact a local, 1 percent sales tax.
Those and other changes add up to about $190 million and with the $501 million in income tax revenues produce the $690 million.