Lexington, KY – The Blue Ribbon Commission on Tax Reform delivered its 453-page report and recommendations to Gov. Steve Beshear.
Beshear said the commission’s work and research will make the commonwealth’s tax code “fairer, simpler and more responsive to the needs of a 21st century economy.”
From here, the recommendations that tweak the state’s tax structure to the tune of roughly $659 million in new revenue annually will go to the legislature for consideration.
The proposed new revenue streams were achieved by cuts in some areas as well as limits on loopholes. Other areas that are not currently subject to taxation, such as some services, would be taxed if these recommendations are implemented.
A sample of some of the changes to corporate income tax:
• Lower the top corporate tax rate to 5.8 percent.
• Implement single factor apportionment.
• Lower the $3.0 million limited liability entity tax (LLET) threshold to $1.0 million and phase out the effects through $2.0 million.
• Add back management fees in calculation of the corporate income tax base.
• Use destination sourcing for services.
• Fully decouple from the deduction for U.S. production activities Qualified Production Activities Income (QPAI).
• Establish an angel investor tax credit program for certain investments in small businesses.
• Expand the state’s R&D Tax Credit to human capital; cap the amount available and require that it is approved through some governing body, such as Kentucky Economic Development Finance Authority (KEDFA).
For the full report visit: http://ltgovernor.ky.gov/taxreform/Documents/Report/TaxReformCommissionReportFinal.pdf.