Senate A&R now amending a bill to apparently again make the highly ineffective and expensive film tax credit refundable at a cost of $75 million a year, giving away a massive amount of money on an idea that was never given a public hearing or introduced as a bill. #sewage
In addition, Kentucky will be required to refund federal aid equal to the cost of all tax cuts and tax breaks like the film tax credit because of the new provisions of the American Rescue Plan. A double hit to our budget. #kyga21
Here's a comprehensive study of state film tax credits. They are a race to the bottom among states that don't come close to paying for themselves and reward companies for what they would've done anyway. In-state jobs are part-time and temporary. cbpp.org/research/state…
"Refundable" tax credits are like grants. Bringing back its refundability means Kentucky will pay an extraordinary *30%-35%* of the costs of producing television shows and movies in the state--diverting those dollars from schools, infrastructure, health and other services.
While Kentucky is opening up its film tax credit again, other states are wisely shutting theirs down because of their lack of effectiveness. 13 states have eliminated their film tax credits in the last 10 years, and others have scaled them back. cnbc.com/2020/01/31/hug…
Issue explained more fully here: kypolicy.org/kentucky-shoul…
Also added to this bill is the expansion of existing tax break for developers from a cost of $5 million a year to *$100 million.* And there's a special carveout of $30 million of that for an unnamed but very specifically defined project.
Another refundable credit, this program will in essence provide grants of 20%-30% of developers' cost in reinvesting in a property--an enormously big handout to developers.
This idea also was not introduced in a bill or considered in a committee hearing.
Between it and the film tax break, the cost is now more than $175 million a year.
But the budget the legislature will soon pass doesn't even fund school textbooks, at $11 million a year.
Between it and the film tax break, the cost is now more than $175 million a year.
But the budget the legislature will soon pass doesn't even fund school textbooks, at $11 million a year.
A Senate committee also just passed HB 413, which delays an automatic, small unemployment tax increase at a cost of approximately $200 million a year to the underfunded unemployment fund. It will just mean higher costs later, as we describe here: kypolicy.org/hb-413-provide…
That tax cut may also force KY to repay an equivalent amount of aid funds to the federal government. Though Treasury guidance is still forthcoming, the American Rescue Plan includes in its prohibition any change in law that "delays the imposition of any tax or tax increase."
Added to the list is a new one inserted this morning into HB 372--an income tax credit of up to $5K/remote worker that is unavailable for people below poverty & is biggest for those making $100k+, plus a property tax credit that is biggest for those with the biggest houses.
How many people live in Kentucky now and work remotely for an out-of-state employer? Those people would get an income tax break of up to $5,000 + what they pay in state property taxes. A substantial cost.
Let's say you're 1 of the 30K people who live in northern KY & work in Cincinnati. You've been doing your job from home since the pandemic. You could keep doing so (the bill doesn't even specify minimum hours) & get a tax credit of $5K + the amount you pay in state property tax.
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