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Kentucky Income Tax Reform Passes

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DSmith21

Heisman
Mar 27, 2012
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The legislature passed several major tax changes via an override of Gov. Andy's veto. Kentucky's income tax will be lowered in one half percent increments each year until the tax rate reaches ZERO provided certain conditions are met.

The sales tax will be charged on certain new services (ride sharing, fitness instructors, telemarketing, lobbying, cosmetic surgery, tattoos, etc.) not previously taxed in order to make up the revenue. Also electric vehicles and charging stations will be taxed as they are reducing gas tax revenue.

 
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DSmith21

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Mar 27, 2012
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I will gladly pay a $120 annual electric vehicle tax if I don't have to pay 5% of my income to the state. The gas tax is supposed to pay for road up keep. It's only fair to ask EV owners to pay something for their road usage since they don't buy gas, IMO.
 
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Tskware

Heisman
Jan 26, 2003
25,335
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DSmith21 said:
The gas tax is supposed to pay for road up keep. It's only fair to ask EV owners to pay something for their road usage since they don't buy gas, IMO.
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Agree, plus should apply at some lesser rate to hybrids, I have owned three or four, and I obviously don't buy near the gas that a regular car does.

To the poster above, the new sales taxes will raise a miniscule amount of revenue compared to the lowered personal income rate . . . . which may be fine in the long run, will sure save me some money. But it will in no way replace the reduction in state revenue.
 
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DSmith21

Heisman
Mar 27, 2012
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Tskware said:
Agree, plus should apply at some lesser rate to hybrids, I have owned three or four, and I obviously don't buy near the gas that a regular car does.

To the poster above, the new sales taxes will raise a miniscule amount of revenue compared to the lowered personal income rate . . . . which may be fine in the long run, will sure save me some money. But it will in no way replace the reduction in state revenue.
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If the new sales taxes don't cover the cost of the income tax cuts, then the future incremental cuts will not happen per the new law. It seems pretty sensible.
 
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jameslee32

Heisman
Mar 26, 2009
33,643
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DSmith21 said:
I will gladly pay a $120 annual electric vehicle tax if I don't have to pay 5% of my income to the state. The gas tax is supposed to pay for road up keep. It's only fair to ask EV owners to pay something for their road usage since they don't buy gas, IMO.
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Personal Property tax was eliminated?
 
T

Tskware

Heisman
Jan 26, 2003
25,335
22,169
113
DSmith21 said:
If the new sales taxes don't cover the cost of the income tax cuts, then the future incremental cuts will not happen per the new law. It seems pretty sensible.
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I would have to read the law but I believe the 1st cut was already baked in, the next phase of cuts in the personal income tax would operate as you say
 
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gamecockcat

Heisman
Oct 29, 2004
10,524
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From my experience living in TX which has no state income tax, be prepared for significantly higher taxes elsewhere. I was paying >$5400 in property tax on my $250k home. Sales tax was 8.25%. The government needs revenue. They'll get the same or more from you, just in different ways.
 
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Dr. H Lecter

Heisman
Apr 5, 2007
15,219
30,124
66
gamecockcat said:
From my experience living in TX which has no state income tax, be prepared for significantly higher taxes elsewhere. I was paying >$5400 in property tax on my $250k home. Sales tax was 8.25%. The government needs revenue. They'll get the same or more from you, just in different ways.
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Yes this is true. But unlike with the income tax which is done by withholding from your paycheck....you can at least have control over where you spend and how much you spend to be taxed. The income tax via withholding just melts into the background and you feel like the state gives you something if you get a refund. That is the insidious system we have in place. You don't really feel how much you are taxed. If you get that 5-6-7% raise you immediately see that in your pay stub.

Further this prevents the politicians to buy off votes by the "tax the rich" rhetoric. If we ALL pay sales tax then we all can demand explanations from the pols who want the sales tax or property tax to increase by a percent. If the Dems use their usual tactic....increase the rate on the "millionaires and billionaires" they continue to use class struggle to raise taxes and that group of itself cannot be taxed enough to cover all their spending.

A consumption tax is the most fair because if you buy expensive stuff or more stuff you pay more tax.
 
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vhcat70

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Feb 5, 2003
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MrHotDice said:
Paying taxes each year for car you drive is a disgrace.
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I'd rather pay sales & property taxes than income taxes. The former are a choice & very hard to dodge while the latter can be dodged by cash payments. If you say user taxes hurt the poor then give them cash handouts to compensate.
 
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vhcat70

Heisman
Feb 5, 2003
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DSmith21 said:
I will gladly pay a $120 annual electric vehicle tax if I don't have to pay 5% of my income to the state. The gas tax is supposed to pay for road up keep. It's only fair to ask EV owners to pay something for their road usage since they don't buy gas, IMO.
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Don't think all of that 5% income tax is going away any time soon, like for over 10 years. But I'll take the starting to do so.
 
S

Spica Orbit

All-Conference
Apr 7, 2007
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gamecockcat said:
From my experience living in TX which has no state income tax, be prepared for significantly higher taxes elsewhere. I was paying >$5400 in property tax on my $250k home. Sales tax was 8.25%. The government needs revenue. They'll get the same or more from you, just in different ways.
Click to expand...
---
Easy solution, just print up a batch of money. That's what they do in DC.
 
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DSmith21

Heisman
Mar 27, 2012
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gamecockcat said:
From my experience living in TX which has no state income tax, be prepared for significantly higher taxes elsewhere. I was paying >$5400 in property tax on my $250k home. Sales tax was 8.25%. The government needs revenue. They'll get the same or more from you, just in different ways.
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Kentucky can generate a gusher of additional tax revenue by adding casino gambling and sports betting like surrounding states. This would be another consumption tax and a good part of it paid by tourists.
 
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Tskware

Heisman
Jan 26, 2003
25,335
22,169
113
gamecockcat said:
From my experience living in TX which has no state income tax, be prepared for significantly higher taxes elsewhere. I was paying >$5400 in property tax on my $250k home. Sales tax was 8.25%. The government needs revenue. They'll get the same or more from you, just in different ways.
Click to expand...
In Florida, which has no income tax, there are also a lot of fees you never think about. It used to be (assume it still is) that a fee was collected based on the amount of mortgage, something like $1 per 1000, so a $4,000,000 mortgage would cost $4000 to record, in Kentucky same document is $50.

And in 2008, when the recession and financial crisis hit, and the Ky legislature was screaming bloody murder due to lack of funds, I was told by a state lobbyist that all the states without income tax were having the same budget shortfalls, for pretty much the same reasons.

Moral to the story, there is no free lunch.
 
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Beatle Bum

Heisman
Sep 1, 2002
40,824
62,068
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Tskware said:
In Florida, which has no income tax, there are also a lot of fees you never think about. It used to be (assume it still is) that a fee was collected based on the amount of mortgage, something like $1 per 1000, so a $4,000,000 mortgage would cost $4000 to record, in Kentucky same document is $50.

And in 2008, when the recession and financial crisis hit, and the Ky legislature was screaming bloody murder due to lack of funds, I was told by a state lobbyist that all the states without income tax were having the same budget shortfalls, for pretty much the same reasons.

Moral to the story, there is no free lunch.
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Give government more money and we aren’t just talking lunch, but also breakfast, dinner, snack time, tea time, massage time, and late night snack time.
 
W

WayneDougan_rivals170043

Heisman
Jan 28, 2007
20,397
30,168
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Caveman Catfan said:
Sounds like a regressive tax scheme that will force people in poverty to get their tattoos in dark alleys, rather than in safe sterile environments! Not cool!!
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Good - perhaps idiots will get fewer tattoos in the future. In fact, I think they should pass a law that if you have a visible tattoo (i.e., you can see it when you are wearing shorts and a t-shirt), your income tax goes up.
 
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Beatle Bum

Heisman
Sep 1, 2002
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113
WayneDougan said:
Good - perhaps idiots will get fewer tattoos in the future. In fact, I think they should pass a law that if you have a visible tattoo (i.e., you can see it when you are wearing shorts and a t-shirt), your income tax goes up.
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Okay, but my post was a joke. Not a good one, obviously, but a joke, nevertheless.
 
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WayneDougan_rivals170043

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Caveman Catfan said:
Okay, but my post was a joke. Not a good one, obviously, but a joke, nevertheless.
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I know... but this is literally me when I see or hear about tattoos. It's the downfall of our society right now. I am going to run for governor as a single issue voter on a tattoo tax. 😂

 
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ukcatz12

Heisman
Mar 27, 2009
5,199
12,325
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Tskware said:
In Florida, which has no income tax, there are also a lot of fees you never think about. It used to be (assume it still is) that a fee was collected based on the amount of mortgage, something like $1 per 1000, so a $4,000,000 mortgage would cost $4000 to record, in Kentucky same document is $50.

And in 2008, when the recession and financial crisis hit, and the Ky legislature was screaming bloody murder due to lack of funds, I was told by a state lobbyist that all the states without income tax were having the same budget shortfalls, for pretty much the same reasons.

Moral to the story, there is no free lunch.
Click to expand...
Florida is also buoyed a bit with all the taxes on tourists. Easy for residents of the state to have less tax levied on them when every tourist that comes through Orlando is paying sales tax on their Disney souvenirs, rental car tax, tolls, hotel tax, etc. etc.
 
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ukcatz12

Heisman
Mar 27, 2009
5,199
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bbncal02 said:
In taxes? So you’re paying 12,000 a year? Oof.
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Yes, just property taxes. There's certainly bloat that could probably be cut, but in general the high tax rate up here is worth it. The state is 1st in education, 4th in health care, 4th in public safety, 5th in economic opportunity, 3rd in household income, 2nd in low food insecurity, and 5th in low poverty rate.
 
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Blue Hair_rivals393513

Sophomore
Jan 25, 2022
147
177
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Ky was ranked as the fourth least taxed state a few years ago. Little surprised they want to move to no income tax, as this means big changes over time to all other taxing structures and the addition of new taxing on goods and services.
 
V

vhcat70

Heisman
Feb 5, 2003
57,418
38,484
0
gamecockcat said:
From my experience living in TX which has no state income tax, be prepared for significantly higher taxes elsewhere. I was paying >$5400 in property tax on my $250k home. Sales tax was 8.25%. The government needs revenue. They'll get the same or more from you, just in different ways.
Click to expand...
That's a good deal. Illegals have to pay sales & gas taxes, not income ones.
 
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ukalum01

ukalum01

All-Conference
Apr 29, 2002
18,080
3,260
93
Tskware said:
I would have to read the law but I believe the 1st cut was already baked in, the next phase of cuts in the personal income tax would operate as you say
Click to expand...

Initially it was the case that the income tax would go to 4% on 1/1/23, but it was changed in the free-conference committee. HB 8 is a pretty substantial tax increase in sales/use/state transient with no decrease mandated in the income tax. The income tax stays at 5% for 2023 unless some extremely unlikely markers are hit by the beginning of this September.

Between 2018 HB 487 and 2022 HB 8, sales/use taxes have been increased substantially while the effective state income tax rate for most residents has dropped very little.
 
T

Tskware

Heisman
Jan 26, 2003
25,335
22,169
113
ukalum01 said:
Initially it was the case that the income tax would go to 4% on 1/1/23, but it was changed in the free-conference committee. HB 8 is a pretty substantial tax increase in sales/use/state transient with no decrease mandated in the income tax. The income tax stays at 5% for 2023 unless some extremely unlikely markers are hit by the beginning of this September.

Between 2018 HB 487 and 2022 HB 8, sales/use taxes have been increased substantially while the effective state income tax rate for most residents has dropped very little.
Click to expand...
Think it is almost certain to go to 4.5% automatically based on current surplus.but then will have to hit markers

Some say it may cost state $800M but time will tell
 
D

DSmith21

Heisman
Mar 27, 2012
8,297
13,024
0
ukalum01 said:
Initially it was the case that the income tax would go to 4% on 1/1/23, but it was changed in the free-conference committee. HB 8 is a pretty substantial tax increase in sales/use/state transient with no decrease mandated in the income tax. The income tax stays at 5% for 2023 unless some extremely unlikely markers are hit by the beginning of this September.

Between 2018 HB 487 and 2022 HB 8, sales/use taxes have been increased substantially while the effective state income tax rate for most residents has dropped very little.
Click to expand...
According to this analysis, the first two cuts (to 4%) appear to be "highly likely" as the targets will likely be met. We will see after that if we hit the targets.

 
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