Dec. 12, 2012 — Lo and behold, a few days after we again criticized the tax reform commission, that group came up with some suggestions that give us hope.
The Louisville Courier-Journal described the recommendations as “refreshingly progressive and promising”.
That’s high praise for the umpteenth study we’ve had since someone first pointed out that much of our state tax code is a relic from the last century.
Gov. Steve Beshear and the legislature have had to slash $1.6 billion from the state budget since 2007 and state and local governments are desperate to recover those funds.
The new recommendations theoretically would produce nearly $700 million a year in new revenue and that would be a great beginning.
In our view, the governor and the General Assembly must make sure that tax reform really happens, starting in the 2013 session.
Insiders are saying Beshear is anxious to create a legacy in his second term and this could be his last, best chance.
He also may get another turn at bat with expanded gambling with new Republican leadership in the Senate.
However, it may not be realistic to expect lawmakers to reform taxes and put expanded gambling on the ballot in the same year.
We gladly commend the Governor’s Blue Ribbon Commission on Tax Reform, ably headed by Lt. Gov. Jerry Abramson, for coming up with a good starting place for modernizing Kentucky’s tax code.
Kentuckians don’t like higher taxes but neither should we tolerate having our citizens continue suffering from underfunded schools, public health programs, and social services.
Debate already has started on the proposal to raise the state cigarette tax from 60 cents a pack to a dollar. Some say it should be higher.
Senior citizens won’t enjoy paying more state income tax on retirement benefits but Kentucky’s exemption of $41,110 is among the nation’s highest. Social Security income would remain untaxed.
Limiting itemized deductions on state income taxes to $20,000 would let most of us still deduct home mortgage interest and charitable deductions.
Adding a state earned income tax credit like the feds have would be a big help for the working poor.
Corporate income taxes would be reduced slightly, mostly to benefit large companies that operate in several states but that could save or create jobs.
Adopting all of the proposed reforms won’t solve all of our money problems – such as the worrisome shortfall in public pension funds – but it would be a solid start.
What we need now is the political courage to make it happen.