Difference between revisions of "Kentucky"

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*[http://www.alec.org/am/pdf/tax/09RSPS/states/09kentucky.pdf Snapshot of Kentucky-ALEC]
 
*[http://www.alec.org/am/pdf/tax/09RSPS/states/09kentucky.pdf Snapshot of Kentucky-ALEC]
 
*[http://www.aicpa.org/pubs/taxadv/online/mar2004/godfrey.htm The Phase-Out]
 
*[http://www.aicpa.org/pubs/taxadv/online/mar2004/godfrey.htm The Phase-Out]
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*[http://www.forbes.com/finance/lists/33/2005/LIR.jhtml?passListId=33&passYear=2005&passListType=Misc&uniqueId=338671&datatype=Misc Los Angeles Dodgers are worth...]
  
 
==References==
 
==References==
 
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Revision as of 13:08, 15 June 2009

Kentucky is one of 50 states in the union.

Kentucky Congressional districts

Comparison with other states

  • Virginia
  • West Virginia
  • Ohio
  • Indiana
  • Illinois
  • Missouri


Rankings

April-jobs-by-state-best-worst.jpg
(April 2009)

Kentucky is ranked 36th in the American Legislative Executive Council-Laffer State Economic Outlook Rank vs. 10-Year Economic performance: 1997-2007. Kentucky's Gross State Product Growth in that time frame was 45.8 percent with a Personal Income Growth of 58.4 percent. Personal income per capita growth was nearly 47 percent, while last and least, Kentucky’s population growth sat at just over 7 percent. Net domestic in migration ad percent of population was 2 percent and the non-farm payroll employment growth was just over 9 percent along with an unemployment rate of 5.5 percent. Compare Kentucky to its mother state Virginia, ranking 4th with a gross state product growth of a whopping 80.7 percent. Virginia's personal income growth—an impressive 78.4 percent. Personal income per capita growth: 56.4 percent. Their population growth: a respectable 12.6 percent. Virginia’s net domestic in migration percent of population stood at 2.2 while their non farm payroll employment growth 16.4 percent. Also in 2007, their unemployment rate was just 3 percent.

Kentucky compared to Tennessee

While Tennessee's economic outlook is to improve from 32nd to 9th in the year 2009, Kentucky's economic outlook is not so sunny. The Bluegrass State is expected to drop to 36th. What makes the states that seem so similar so different? One, Tennessee is a Right To Work state. Two, Kentucky and Tennessee have completely different tax policies. Even thirty years ago, the differences between Kentucky and Tennessee’s tax policies were obvious. State and local tax as a percentage of personal income tax here was 10 percent higher than Tennessee’s. The main difference was that Kentucky had a personal income tax while Tennessee did not. Today, there is no personal income tax progression (change in how much a citizen owes per $1,000 of income) in the Volunteer state while in Kentucky it is $5.28. The sales tax in Tennesse is nearly twice as much as in Kentucky because there is no true income tax. Tennessee only taxes dividend and interest income. [1] Over a 16 year period, Tennessee kept up its low-tax climate with taxes as a percentage of personal income dropping slightly. Kentucky did the opposite and raised more taxes than Tennessee and the bordering states. “By 1996, taxes per $1,000 in personal income were $117.29 in Kentucky, but only $90.42 in Tennessee. The Kentucky tax burden was nearly 30 percent higher than in the Volunteer State.” [2] By 1998, the income difference had grown to $2,064 in favor of Tennessee. (In 1980 the income difference was a meager $16.) In any case, it takes Kentuckians one month longer to make what a Tennessean does in one year. Why? Income taxes are a direct burden on income and production and income taxes rise faster than income normally does. ALEC says that Kentucky would have to eliminate its income tax or lower it substantially to catch up to Tennessee.

Jobs.jpg

Why the "death tax" matters

Twenty-two states have estate taxes, also known as the "death tax." Estate taxes are taken from the taxable [3] estate of a citizen who has died. In other words, this is a tax on income that has already been taxed. Because of this many Americans are against the death tax. [4] There is also a federal estate tax. Property, business assets and investments can all be taxed. The executor fills out a single estate tax return and pays the tax; heirs are liable for the tax if it remains unpaid. The federal government imposes an estate tax on all citizens and residents of the United States but no inheritance tax. All estates get a tax deduction for property received by the decedent's husband or wife along with a $5 million standard exemption for all other property. In other words, a lot of Americans do not owe a federal estate tax.

In 2001, President Bush signed a temporary death tax repeal into law as part of the Economic Growth Tax Reduction and Reconciliation Act (H.R. 1836). It set the federal death tax to go from 55 percent to 45 percent in 2009 and was scheduled for repeal in 2010; it is to expire in 2011 and return to the rate of 55 percent. In President Obama's 2009 Fiscal Year budget he proposed to keep the death tax permanently at 45 percent. However, the American Family Business Institute [5] helped influence the Senate to pass an amendment to lower the tax from 45 percent to 35 percent and raise the exemption from $2 million to $5 million. However, President Obama still wants to keep the tax at 45 percent.

Kentucky has two death taxes. One is the inheritance tax and the other is the estate tax. [6] The inheritance tax is imposed on the beneficiaries who receive property from the one who died. Each beneficiary must be responsible for paying his or her own taxes because the inheritance tax is calculated differently for each beneficiary. Usually, close relatives of the one who has passed on are taxed at a lower rate than other beneficiaries.


Washington state has the highest death tax standing at 19 percent. “Do the Rich Flee from High State Taxes?” a 2004 National Bureau of Economic Research study, found that states can lose up to one out of every three dollars from their estate taxes because “wealthy elderly people change their state of residence to avoid high state taxes.” At the time, states imposed estate tax rates which were one third as high as they currently are. Different families [7] have been known to avoid the estate tax by selling out; perhaps the most famous case of this is with the Los Angeles Dodgers owners, the O'Malley family. [8] Such taxes are the reason why successful businesses are often sold "before their time." [9]

Examples of taxable property

  • Real estate
  • Cash
  • Bank accounts (even if located outside of Kentucky)
  • Certificates of deposit
  • Stock/bonds
  • Life insurance payable to the insured or to the estate
  • Unpaid balance of mortgages/notes
  • Debts
  • Household goods
  • Livestock
  • Crops
  • Automobiles/farm machinery/boats/trailers
  • Income tax refunds
  • Royalties
  • Jewelry
  • Antiques

Links

References

  1. No Income Tax States
  2. Rich States, Poor States report
  3. Estate Tax on Wikipedia
  4. No Death Tax organization
  5. AFBI and the Death Tax
  6. A Guide to Kentucky Inheritance and Estate Taxes
  7. Steinbrenner learns from O'Malley
  8. O'Malley sells the franchise
  9. Planning for the future