Back in May I wrote an editorial about the unintended consequences of House Bills 487 and its companion HB 366 which raised taxes upon the citizens of the Commonwealth. At the time we did not know the full scope of the legislation and the impact upon the citizens because there was no fiscal statement, no analysis prior to the majority voting on these bills.
Four months later; we are beginning to understand the picture. We now know that taxes and revenue have been raised 41 different ways. We know that many income tax deductions have been removed. We know that retired teachers and public employees lost $10,000 in pension-income exclusion from taxes.
Impacting small businesses, corporate income taxes have increased for some and have been lowered for others. Among the miscellaneous fees that have been raised, KCTCS is now allowed an $8 per credit hour fee to be used exclusively for debt services. All motion picture production company tax incentives have been suspended and sales and usage taxes have been increased on pollution control facilities.
I am hearing from citizens and small businesses how upset they are by the lack of clear information to pass on to their customers and how unfair the whole system seems to be. I agree.
I have pre-filed legislation to rescind the sales taxes now imposed on non-profit organizations. Other legislators are looking at similar legislation in various areas. What is needed most of all, is total tax reform that includes new revenue sources that are fair to everyone.
Once we get through the November elections, I hope that there will be the momentum to make changes before too much damage is done to our economy and families as a result of all these tax increases. Following is a list of new taxes, fees and revenue.
41 Ways TAXES AND REVENUES have been RAISED
House Bill 487 (and its companion HB 366) raises taxes/revenue AT LEAST 41 different ways:
1. Raises cigarette tax by 50 cents per pack.
2. Imposes a floor stocks tax on cigarettes.
EXPANDED ADMISSIONS TAX, which includes:
4. Skating rinks
5. Health spas
6. Swimming pools
7. Tennis courts
8. Weight training
9. Fitness centers
SALES TAX ADDED TO SERVICES:
13. Small-animal veterinary services
14. Pet-care services
15. Non-coin-operated laundry and dry-cleaning services
16. Linen supply services
17. Indoor tanning services
18. Non-medical diet and weight-reducing services
19. Limousine services
20. Extended-warranty services
INCOME TAX DEDUCTIONS REMOVED:
21. Investment interest
24. Medical-care expenses
25. Moving expenses
26. Other miscellaneous deductions
27. Any deduction allowed by the Internal Revenue Code for amounts allowed under state law in calculating the value of the distributive shares of the estate of a decedent, unless there is filed with the income return a statement that the deduction has not been claimed under that law.
28. Any deduction allowed by U.S.C. sec. 151 for personal exemptions.
29. Amend net income to disallow the 20% deduction related to pass-through income to individuals under Section 199A of the Internal Revenue Code;
30. Eliminate the $10 personal credit for the taxpayer,
31. spouse, and
32. each dependent.
33. Disallows Domestic Production Activities Deduction in conformance with Internal Revenue Code.
34. Reduces pension-income exclusion from $41,100 to $31,100
CORPORATE INCOME TAXES (This will increase taxes for some, lower them for others):
35. This changes the requirement for a combined report based on being a member of a unitary business group; and
36. Market-based sourcing of sales.
37. For the current budget cycle, there is a new $2 fee for each new motor vehicle tire purchased, and sales tax is collected on it. That is up from the $1 fee that had been charged, and that fee was not subject to the sales tax.
38. Allows a KCTCS fee not to exceed $8 per credit hour to be used exclusively for debt service.
39. Imposes sales and use tax on property certified as a pollution control facility.
40. Suspends the motion picture production company sales tax incentive until July 1, 2022.
41. Requires the Department of Fish and Wildlife Resources to pay an assessment in an amount equal to 5% of the debt service associated with the Kentucky State Police two-way radio system.