Stivers speaks at Washington function

Oct. 12—FRANKFORT — Senate President Robert Stivers spoke at the notable Americans for Tax Reform (ATR) in Washington, D.C. recently, a weekly gathering of more than 150 elected officials, political activists, and movement leaders.

ATR Founder and President Grover Norquist invited Stivers because of Kentucky's recent historic tax reduction and movement to a consumption based tax. This tax reform was part of House Bill 8 and builds a pathway to lower the income tax incrementally from 5 percent to zero. The bill, now law, includes triggers to reduce income tax incrementally by .50 percent based on certain economic conditions being met.

"We've made a historically significant change in our tax structure during this past session that will posture Kentucky for solid economic growth over the next five years," said Stivers. "States that have moved to a consumption based tax are attracting business and people to their state and this move poises Kentucky to be competitive for these new opportunities."

Kentucky experienced its first trigger August 31 and decreased the state income tax from 5 percent to 4.5 percent, effective Jan 1, 2023.

"This pro-growth income tax cut is a huge win for all residents of Kentucky," said Norquist. "It will allow all income taxpayers to keep more of their hard-earned money and, by putting a full elimination of the state income tax in law, will allow Kentucky to start competing with the no income tax states. Attracting new jobs and better opportunities to the state is a win for everyone."

Prior to HB 8's passage, the commonwealth saw its first income tax rate reduction from 6 percent to 5 percent in 2018. As the required conditions legislated through HB 8 are met, the income tax rate may gradually decrease, while also ensuring a healthy Budget Reserve Trust Fund (BRTF) and that the state's income remains greater than its spending within that same fiscal year.

There are two conditions that trigger an income tax rate drop.

The first condition requires the balance in the state's BRTF at the end of each fiscal year to be equal to or greater than 10 percent of the General Fund monies for that fiscal year.

The second condition requires the state's General Fund receipts to be greater than the total of: the state's general fund appropriations plus 1% of the amount of revenue the state's Individual Income Tax (IIT) equivalent rate would produce.

ATR is a taxpayer advocacy group Norquist founded in 1985 at President Ronald Reagan's request. ATR works to limit the size and cost of government and opposes higher taxes at the federal, state, and local levels and supports tax reform that moves towards taxing consumed income one time at one rate.