Lawmaker Proposes Elimination of State Income Tax

A haircut at Jerry's Barber Shop in Somerset costs $9. It's a service that's currently tax free. But what if you had to pay 45 cents a haircut in taxes, but in return you didn't have any state income tax taken from your paycheck?

“Yeah, I'd go for that,” says Bill Broussard of Somerset.

Representative Bill Farmer is about to file a bill to eliminate state income taxes for individuals and businesses. The sales tax would be dropped from 6% to 5%, yet some services, like haircuts, would be taxed.

“We've tweaked the system that we know is not capable of sustaining the economy, it's going to drastically change the system we're doing,” said Rep. Bill Farmer, R-Lexington.

Mike Sullivan runs a cellular phone business in Pulaski County and says less income taxes puts more dollars in his customers pockets.

“They’ll have more money. We have 36,000 cars that pass by the store daily (on U.S. 27.) And if they have more money in their pockets, to me, they're more apt to stop by,” said Sullivan.

The plan is revenue neutral. That means it won't bring a whole lot more money into Kentucky, but it won't cost the state much either.

Farmer says the bill should attract more businesses.

“When businesses look at places to locate, they look at the tax structure, and if there is no income tax, that's one less thing they have to worry about and one less thing they have to plan for,” said Farmer.

Besides haircuts, other services that could be taxed include car repairs and plumbing work.

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