Now that the Democratic and Republican leaders of the Kentucky Senate and House of Representatives have agreed on a plan for amending the state’s “alternative minimum tax” on businesses, the way has been cleared for Gov. Ernie Fletcher to call a special session of the General Assembly to enact that agreement into law. The special session — which the governor said will begin Thursday — should be a brief one, lasting no more than a day or two.

The special session was necessitated by the failure of the Democratic leadership of the House of Representatives and the Republican leadership of the Senate to reach a compromise on slightly different tax relief plans in the closing days of the 2006 General Assembly. Thus, the 60-day session ended with nothing being done.

However, the stalemate was broken two weeks ago when Senate President David Williams, R-Burkesville, offered a compromise. House Speaker Jody Richards, D-Bowling Green, agreed with Williams’ proposal, clearing the way for the special session Fletcher has been promising businesses since the day the 2006 session ended in April.

The “alternative minimum tax” calculation that has drawn the ire of Kentucky businesses is a result of the 2005 tax code overhaul pushed by Fletcher. Under it, thousands of Kentucky businesses found they owed taxes even though they earned little or no net profits. That’s unfair. No one should pay taxes on non-existent profits.

The compromise reached by Democrats and Republicans will provide at least some tax relief to approximately 70,000 Kentucky businesses. It would exempt businesses that take in less than $3 million in annual gross profits or gross receipts, but make no net profit, from paying a tax beyond the $175 minimum. Other businesses that earn between $3 million and $6 million in yearly gross profits or receipts would also get varying degrees of relief, under the proposal.

In reaching an agreement, both Richards and Williams said they would allow no changes in it during the special sessions. While we are not sure they can — or should — limit the input of the other 136 members of the General Assembly, rubber-stamping the compromise is the surest way of assuring a brief special session.

Whenever a major piece of legislation like Fletcher’s “tax modernization” plan is enacted, there invariably seem to be oversights that lead to unintended consequences. While the plan was being debated in 2005, businesses were supportive of it and said little about the “alternative minimum tax.” However, after they learned what they would be paying under the plan, their protests were loud and clear.

The governor and legislators have heard those voices and, if all goes as planned, they will have responded appropriately by the end of this week.

The compromise is an all-too-rare example of how Republicans and Democrats in the Kentucky General Assembly can put aside their differences and work together in response to the nearly unanimous protests of constituents. Just as legislators heard the cries of state employees and teachers to the health care insurance plan proposed by Governor Fletcher in 2004, they have heard the cries of small businesses this time.

How we wish such a willingness to seek solutions, instead of play politics, was the norm instead of the exception.

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