House Republicans draft tax reform proposal

This from H-L:

Amid the financial worries and talk of state shortfalls, some House Republicans are suggesting that now is the time to eliminate the state's corporate and individual income taxes.

Not only that, but they're also calling for dropping the sales tax from 6 cents to a nickel on every dollar of goods purchased.

So how will taking away all that revenue stabilize the shaky status of the state's coffers?

The legislation drafted by Reps. Bill Farmer of Lexington and David Floyd of Bardstown would replace the income tax by spreading the sales tax to a host of services that are currently exempt, including plumbing, roofing and other contracting work, and some consulting work.

Work performed by doctors, lawyers and accountants, however, would remain untaxed, Farmer said.

Another huge chunk of change would roll into the state's bank account by charging 5 percent tax on rent paid for commercial — but not residential — real estate space, according to the 66-page bill.

"The state of Kentucky doesn't tax non-residential real estate. There's no exclusion; we just don't tax it," Farmer said. "It would be a huge source of revenue."

Farmer claims that applying a 5 percent tax rate to that rental income and those services would cancel out the more than $4 billion the state brings in each year through the personal and corporate income tax. But that hasn't been independently verified yet...