![]() And those are all kind of political and policy decisions that in part the economics literature can shed some light on, but they also involve important judgments by our citizens and politicians in terms of what their values are. “These are different taxes, and they have different distributional implications. “We’ve seen basically that the base-broadening efforts by states have not really kept up with the shift from goods toward services,” said Dr. David Agrawal, associate professor with the Martin School of Public Policy and the Department of Economics at the University of Kentucky. ![]() But overall across the country, income taxes are responsible for roughly 40% of state revenues, while sales taxes make up a little less than 30%, according to Dr. Several states in recent years have shifted away from income taxes to more consumption-based taxes. (Republican lawmakers have said that they would like to take it a step further by taking a vote in the 2023 short session to cut the tax rate down to 4% starting in January 2024, according to multiple reports.) It triggered a 0.5% drop to 4.5% starting January 1. And HB 8 has also created conditions to incrementally cut - and potentially phase out - the state’s income tax. Kentucky has a flat income tax of 5 All earnings are taxed at the same rate, regardless of total income level. Previous changes in 2018-19 added more services to the sales and use tax base. The changes are part of a broader shift in strategy when it comes to the state’s taxes and revenue. The calculator is updated with the latest tax rates and brackets as per the 2021 tax year in Kentucky. prewritten computer software access services.labor to repair or alter apparel, footwear, watches or jewelry when no tangible personal property is sold in that transaction.labor and services to repair or maintain commercial refrigeration equipment and systems when no tangible personal property is sold in that transaction including service calls and trip charges.interior decorating and design services.massage services, except when medically necessary.leisure, recreational and athletic instructional services.social event planning and coordination services.rental of space for meetings, conventions, short-term business uses, entertainment events, weddings, banquets, parties and other short-term social events.condominium time-share exchange services.road and travel services provided by automobile clubs.repossession of tangible personal property services.residential and nonresidential security system monitoring services.website design and development services.executive employee recruitment services.public opinion and research polling services.photography and photo finishing services.The new law, in addition to making several other changes, expands the sales and use tax base to include the following services (as long as the provider exceeded $6,000 in gross receipts in 2021 or 2022):
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