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Legislature overrides budget and tax vetoes

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By State Representative Brandon Reed
 
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 per-pupil education funding, and allowing working Kentuckians to keep more of their take-home pay.
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 critical to ensuring that government functions effectively. We are a co-equal branch of government, and I personally do not give blind loyalty to any person or political party.
The tax measure passed by the General Assembly is monumental, as it is the first significant tax reform measure passed by the General Assembly since the 1930s. 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 successfully 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.
Our plan also drastically simplifies the tax code, removing many deductions and exemptions in favor of increasing the actual take-home pay of working Kentuckians. However three heavily utilized tax deductions remain: the mortgage-interest deduction, the charitable deductions, and deductions for social security income.
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 to provide revenue for their state, and they have more jobs, less poverty, and higher household incomes.
Like all major pieces of legislation, this measure will require tweaks as time goes on. It is not perfect. But make no mistake about it: I am committed to modernizing our tax code in a way that allows Kentuckians to keep more of their paychecks while maintaining our ability to make critical investments. I would personally like to see us continuing individual income taxes even further.
We also did not fund legislative pensions in this budget. Instead, we rerouted those dollars towards the State Police Retirement Fund, who are far more deserving than we are. While the governor vetoed this, we overrode that as well, taking a strong stand against funding legislative pensions.
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.
Editor’s note: Rep. Brandon Reed represents the 24th House district, which includes Green, LaRue, and Marion counties, in the Kentucky General Assembly. Contact him with any questions, concerns, or advice. He can be reached through the toll-free message line in Frankfort at 1-800-372-7181, or via e-mail at Brandon.Reed@LRC.KY.GOV.