GOP-led House passes bill to overhaul Kentucky’s tax system

FRANKFORT, Ky. (AP) — House Republicans voted Friday to fundamentally revamp Kentucky’s tax code, passing legislation to phase out personal income taxes and expand sales tax from the state to more services.

The measure – which was approved by the House by a vote of 67 to 23 after a long debate – would shift tax collections increasingly towards consumption and away from personal income. The proposal is advancing in the GOP-led Senate as tax and budget issues dominate the final weeks of the legislative session.

Republican supporters of the plan trumpeted its sweeping changes. They predicted it would encourage job growth and population gains by allowing people to keep more of the money they earn.

“Stop the old thought process – tax it, spend it,” said GOP Rep. Jason Petrie. “We’ve had a good 100-year history here. And our numbers and our results are not attractive at all.

Democrats opposed to the measure said it would disproportionately benefit wealthier Kentuckians and could starve the state of the revenue needed to properly fund schools and other essential services.

“I don’t think the math adds up,” said Democratic Rep. Rachel Roberts. “And I also think it’s regressive. I think it hurts the poor in our state. I think it helps the rich in our state.”

Under the bill, the state’s 5% personal income tax rate would be lowered gradually over a period of years with the goal of eventually eliminating the levy. The measure provides for a reduction in the rate to 4%. After that, future tax rate reductions would depend on the government meeting revenue targets.

To broaden the tax base, the proposal would extend the sales tax to a number of services.