In light of the chronic revenue shortfalls and budget disasters plaguing Kentucky and the total unwillingness of career politicians like Steve Beshear and David Williams to address these issues here is a tax simplification and fairness plan as part of my vision for Kentucky. I am calling for a total revision of KRS Chapter 141 dealing with taxes. This plan is a simple, fair, and progressive tax plan that will put dollars in the hands of working people and small business while progressively taxing the richer segments of our economy.
The Tax Simplification and Fairness plan has five key points:
1. Revise the individual income tax rates with no tax on earnings below $50,000. Income over $50,000 will be taxed a graduated rate from 6% to 15%.
2. No tax on business income less than $250,000. Income over $250,000 would be taxed at a graduated rate from 6% to 15%.
3. Eliminate the Limited Liability Entity Tax (LLET)
4. Eliminate all tax credits, exemptions, rebates, exclusions, incentives and deductions.
5. Reduce the sales tax rate to 4% and expand the sales tax to all services and goods excluding food and medical.
The median household income in Kentucky is about $40,000 and small business in Kentucky accounts for over 95% of all jobs. The first three points of our plan addresses the need of putting money in the hands of individuals and businesses that will spend the money and jump start the economy in Kentucky.
The elimination of the LLET would remove an unfair tax on small business in Kentucky.
Kentucky currently gives away half of all tax revenue in credits, exemptions, rebates, exclusions, incentives and deductions. Many of these “tax breaks” were enacted by the General Assembly and signed by Governors to curry favor with special interest groups. There should be no sweat heart deals for the special interests. Everyone will pay their fair share.
Reducing the sales tax rate and expanding the tax to services acknowledges the fact that Kentucky has moved from a manufacturing based economy to a service based economy. We feel that taxes on services would be fair to all Kentuckians. If you want to rent a stretch limo or hire a tax accountant you should pay a tax on that service. Everyone will pay their fair share.