FRANKFORT, Ky. (FOX 56) – Inflation and high gas prices continue to put a strain on Kentucky families. State lawmakers tried to move several bills around to put more money in their pockets in the 2022 session.
A brief state sales tax cut and a one-time tax rebate are among ideas that never made it to the governor’s office, but a bill freezing property taxes on vehicles got signature. by Governor Andy Beshear and another income tax cut is pending approval. .
“At the end of the day, it’s their money and so they should be taxed on how they spend it, not just whether they earn it,” said J. Taylor Davis, president of DFG Advisory, at FOX 56.
Financial advisers like Davis are optimistic that legislation like House Bill 8 could soon become law.
Davis helped advise on the legislation and said lawmakers were receptive to his suggestions. The bill is one of a number of measures the General Assembly has taken to alleviate day-to-day inflation problems. It would extend sales taxes to certain services and establish triggers for state income tax to drop until it disappears. Davis helped advise on the legislation and said lawmakers were receptive to suggestions, including what services would ultimately be included in the expanded tax base.
“I’m very supportive of Kentucky moving forward and doing its best to lower income taxes because the states we compete with have already done that,” Davis said.
“I mean, does my tax go from 5% to 4% immediately? You know? They say it can drop to zero if the state coffers bring in $21 billion, but we’re at $12 billion,” Lawrence York, chief investment officer of ProActive Advisors, told FOX 56.
Other advisers like York are more skeptical of the immediate impact. He believes it helps attract more business to the state, but isn’t sure a 1% cut will make a difference for poorer families.
“The cost of food and the gas tax probably take 25% more money out of people’s pockets,” he said.
York and Davis both suggested that a 26-cent gas tax freeze in Kentucky might have had the biggest impact, as other states have. Drivers may find some relief after a vehicle property tax freeze was enacted at the start of this session.
“You have a young family and the vehicle taxes are going up, those tuition fees to the school they want to send their kids to, those are extracurricular activities that eat into their after-tax income more,” Davis said.
House Bill 8 pushed back Democrats on broadening the sales tax base to include more services like Uber, Lyft and Airbnb and imposing a levy on electric vehicles. Beshear has yet to sign or veto the bill.
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