Lawmaker proposes return to graduated state income tax

Published 4:55 pm Wednesday, January 11, 2023

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Kentucky Today

Saying Kentucky “simply cannot afford” the ongoing shift in tax policy that benefits the wealthy, hurts middle and lower-income families and puts vital government services at risk, a Democratic lawmaker is proposing returning to a graduated state income tax.

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The Kentucky House last week approved a bill lowering the income tax rate from 4.5% to 4% in 2024, but Rep. Lisa Willner of Louisville has filed legislation restoring the graduated tax rate for those earning $100,000 or more annually, starting in 2024.

“Kentucky is unfortunately heading in a direction that other states like Kansas have already shown will not work,” she said. “The end result is that millionaires will get richer while most Kentuckians will get pocket change, if that. Current surpluses give us the illusion that we can have our cake and eat it, too, but it will only be a few years before the scheduled $1.2 billion annual give-away causes real and lasting damage here in the commonwealth.”

Willner noted, last week, Republican House leaders challenged opponents to offer an alternative. “House Bill 111 is that plan. The reality is that what I propose will help far more Kentuckians without blowing a hole in the state budget.”

Under her legislation, those earning between $100,000 and $125,000 in 2024 would see their individual income tax rate return to 5%, while those earning more than $125,000 would have their tax rate move to 6%. For those making more than $150,000, all income would be taxed at six percent. A six percent top income tax rate was what Kentucky had for over 80 years until it was lowered by the General Assembly in 2018.

House Bill 1, which provides the tax cut to 4%, was approved on a 79-19 vote, and is awaiting a committee hearing in the Senate before it goes to the floor in that chamber. Since the Republicans hold a supermajority in both the House and Senate, Willner’s bill faces an uphill battle.