By overriding tax reform veto, legislators moving Kentucky away from income tax

Published 10:00 am Tuesday, April 17, 2018


House Majority Caucus Chairman

This past week, the legislature overrode the Governor’s vetoes of a pro-education budget and comprehensive tax reform. I was proud of these measures, which placed a high priority on providing record funding to our pension systems, increasing classroom education funding, and allowing working Kentuckians to keep more of their take-home pay.

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I was also thrilled to see the governor sign my adoption and foster care reforms into law. House Bill 1, our top priority that I have spent a great deal of time on, is fully funded in the budget we passed, and will serve as a lifeline to the many children who shuffle in and out of state care.

Every citizen will benefit from a budget that is fiscally responsible while also investing in the right priorities, as well as from a tax reform measure that lowers rates and broadens our tax base. That is why we overrode the governor’s vetoes, a firsthand example of democracy in action. Now that these bills have been overridden, they will become law and be implemented on July 1.

Legislative independence is important. We are a co-equal branch of government, and I personally do not give blind loyalty to any person or political party.

Our tax-reform measure is monumental, as it is the first significant tax reform enacted since the 1930s and the first step toward eliminating the state income tax. There is a significant amount of misinformation going around about this measure, mostly from opponents of the bill who long failed to deliver on tax reform and failed to provide retirement funding for our teachers and state workers.

Let me be clear: Our tax reform will put more money in your paycheck. It lowers the personal income tax rate of 5.8 percent paid by every Kentuckian who earns at least $8,000 per year to a flat rate of 5 percent. This measure also establishes a flat corporate rate of 5 percent, an effort that has proven to be successful in attracting jobs in Kentucky’s surrounding states. In fact, the Tax Foundation, an institution that scrutinizes tax policy, has already moved Kentucky from 33rd to 18th on their list of states with the best tax climate for job creation.

It moves us to a consumption-based tax code by broadening the tax base and lowering rates, sound philosophy recommended by economists on both sides. This is also the underlying philosophy behind the Trump Tax Plan, which working families are already seeing the benefits of. This legislation extends the sales tax to a variety of services in exchange for lowering rates. Our plan also drastically simplifies the tax code in favor of increasing the take-home pay of working Kentuckians.

This taxing model is not only widely recommended, but it works. States who are more heavily reliant on sales taxes are economically better off. For example, Tennessee relies on sales taxes significantly more than Kentucky does to provide revenue for their state, and they have more jobs, less poverty, and higher household incomes. We’ve put forward a responsible tax reform package by learning from the mistakes of states like Kansas. We took action allowing Kentuckians to keep more of their paychecks, while still increasing our investments in education and necessary social services.

Like all major pieces of legislation, this measure will require tweaks as time goes on. As we have taken the first step in a 6- to 8-year process, I am excited to see us moving in a direction to eliminate the income tax, make us more competitive, and keep more money in your pocket.

I am grateful for the opportunity to serve you. In the coming weeks, I will provide more information on more of the major accomplishments in the General Assembly this session.

Rep. David Meade is the majority caucus chairman in the state House of Representatives. He represents the 80th district, which includes Lincoln as well as part of Pulaski County.