Bill proposes to exempt retired military personnel from state income tax | Local news

With two military bases in Kentucky, including one locally at Fort Knox, a bill pre-tabled for the 2022 legislative session has garnered support from area delegates.

Filed by Representative Ken Fleming, R-Louisville, BR971 would create an income tax exemption for first-year income for retired veterans who stay or move immediately to retired Kentucky. It requires permanent residence in the state for at least the following three consecutive years.

“The reason he’s proposing it is a very valid reason,” said Rep. Jim DuPlessiss, R-Elizabethtown. “What we’re seeing is that a lot of the retiring military, especially at our southern post, tend to retire in Tennessee rather than Kentucky because Tennessee doesn’t have a income tax. So if you retire with a military pension in Kentucky after about $ 32,000, you start paying tax on that pension.

Representative Samara Heavrin, R-Leitchfield, said the legislation is a step to help retain military personnel who will add to Kentucky’s economy and workforce.

“We have 400 servicemen and women retiring from bases in Kentucky every month, and I think it’s important that we retain these people,” she said. “They are highly skilled and help increase the participation of our workforce. We know it’s a really big deal in Kentucky right now.

Representative Nancy Tate, R-Brandenburg, said military retirees are also educated, motivated and disciplined.

“We are trying to encourage military personnel to relocate to Kentucky,” she said. “Then every time they retire, we want them to stay in Kentucky because of all the valuable qualities they bring,” she said.

The legislation is part of the state’s strategy to attract retirees from the military, said Representative Josh Calloway, R-Irvington.

“As a state as a whole, we want to be the most veteran-friendly state in the United States of America,” he said. “We want to take care of our veterans and they deserve whatever we can do for them within reason. “

It is for this reason that Calloway, who represents Breckinridge, Hancock and parts of Hardin counties, said he was reviewing the bill but wanted to understand its financial impact before making a decision.

“When we talk about offering tax incentives or being able to benefit from tax exemptions, we understand as a state what kind of financial situation we find ourselves in,” he said. “I’ll be there to take a look at it and make sure we’re doing what we can globally do for the state of Kentucky and support our veterans at the same time.”

At the same time, DuPlessis said the bill does not go far enough.

Saying he has been a “strong voice” in Frankfurt for tax reform, DuPlessis, who represents Hardin County, believes the state should eliminate income taxes and move to a use-based model, much like Tennessee.

“If it’s good for our military to keep them in our state and have them spend money here… why wouldn’t we do that for everyone?” ” he said.

DuPlessis said the model succeeded in Tennessee with a population and economic explosion. He said that prior to the model’s implementation in Tennessee, Kentucky was roughly equal in population. Now Kentucky lags behind by more than 1.5 million people.

“A big part of that, I think, is that they have a state tax program that’s much better than ours,” he said. “Ours is punitive when it comes to income and property taxes are ridiculous. We have to pay our auto taxes every year.

Tate, who represents Meade and parts of Hardin Counties, said tax reform is something outside of the budget that is on the radar of the Republican caucus.

“You’re going to see a lot of talk about this, hopefully,” she said. “It won’t be huge, but it will be a strategic approach to how we implement a consumption tax.”

Heavrin, who represents Grayson and parts of Hardin Counties, said the move was part of the Republican strategy to reform tax law.

“Switching to a consumption-based tax is an important goal for many of us in the state legislature because it allows more Kentuckians to keep the money they’ve earned,” he said. she declared.

While switching to a consumption-based tax model is “something that will work for Kentucky, Calloway said it was easier said than done.

“It’s a very difficult thing to do,” he said. “The problem with tax reform is that there are always perceived winners and losers. Navigating through it is not an easy thing to do.

After 2018, Tate said the caucus is aware of possible unintended consequences, especially if implementation is too quick.

Tate pointed to the 2018 sales tax reform that did not exclude nonprofits requiring them to pay taxes on merchandise and fundraising tickets as an example.

“Some of these decisions had to be overturned,” she said. “That’s not the intention at all. The intention is not to have negative consequences and to broaden the base.

DuPlessis, who is in his last term as state representative and is not considering running for re-election, said it was a goal he hoped to achieve before his term ends.

“I would like that to change before I go,” he said. “Myself and several others are making an effort for this. “

The 2022 legislative session begins on January 4 in Frankfurt.

The Kentucky legislature is a super-majority for Republicans, with all representatives from Hardin, LaRue and Meade counties being Republicans.

Senator Dennis Parrett, the region’s only Democratic lawmaker, was unavailable for comment on Wednesday.

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