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...

Bill Seeks Elimination of State Income Tax

This from the Jessamine Journal:

Two of Kentucky’s state representatives are sponsoring a bill for the upcoming General Assembly that would abolish the state’s income tax and lower the sales tax from 6 percent to 5 percent.

Rep. Bill Farmer, R-Lexington, and Rep. Stan Lee, R-Lexington, filed a bill to amend KRS 139.010 to eliminate the tax on income for all Kentucky workers, a practice that has been adopted in nine other states — Alaska, Florida, Nevada, New Hampshire, North Dakota, Tennessee, Texas, Washington and Wyoming. To offset the lost revenue from the income tax, the bill would extend the 5-percent sales tax to areas that were not previously taxed, such as services and commercial real estate. According to Farmer, that 5 percent will be enough to fund the Kentucky budget.

The thought behind getting rid of the tax is that more money will go directly into the pockets of citizens.

“When you call the plumber every 18 to 24 months, you are going to have to pay five cents on the dollar for what the plumber does for you which you are not paying right now,” Farmer said. “But if you are decent at controlling your money, you will have the money to do it with...