Taxation Policy

Overview
The Chamber is growing increasingly concerned about continued Federal budgetary deficits. While we fully recognize that deficit spending may be necessary under certain economic circumstances, repeated deficits, over decades, is not in the best interest of Northern Kentucky businesses or our communities and region. Sound tax policies will generate stable revenue on a long-term basis, and thereby reward us with sustained economic expansion, wage growth, and a higher standard of living. Recognizing that no single tax policy can be enacted in a vacuum, The Chamber supports short-term stimulus legislation which promotes job retention and job creation.     

Estate & Gift Tax (Death Tax)

Background

The repeal of the Estate and Gift Tax or Death tax is to be phased-in over a 10-year period and was approved as part of the Economic Growth and Tax Relief Reconciliation Act of 2001 signed into law (PL 107-16) on June 7, 2001.

The measure significantly raised the unified credit exemption from $675,000 to $3.5 million and protects heirs of family businesses and farms that are land or asset rich and cash poor from having to sell the firm to pay taxes.

The estate gift and generation-skipping transfer tax is complicated and planning can be difficult and expensive--all for a tax that currently generates little more than 1% of the total federal budget. Nonetheless, the maximum marginal tax rate on estates can still effectively be a stifling 60%.

The current estate and gift tax system can deplete the estates of those who have saved their entire lives, force family businesses to liquidate and lay off workers.  The current system motivates people to make financial decisions for estate tax purposes rather than for business or investment reasons.

Because of Senate rules, the tax relief measure passed in 2001 will expire at the end of 2010.

The Chamber believes that family-owned businesses and individual savers should not be punished for being successful.  The changes in 2001 to the Estate and Gift Tax should not be allowed to lapse in 2011, and should instead be made permanent.

Alternative Minimum Tax

Background
The 2003 legislation enacted by Congress included the reduction of Capital Gains taxes, exclusion of selected stock dividends, and reduced Federal tax rates to stimulate the economy and encourage investment.  Counter to this goal, the current Alternative Minimum Tax structure may subject an estimated 35% of Americans to the AMT.  

Additionally, taxpayers subject to higher state and local taxes are further burdened by being subject to the AMT as a result of those taxes.  We believe that by removing this preference/adjustment, the AMT liability would move closer to what was intended by Congress at the time of original enactment of this code provision.

The Northern Kentucky Chamber supports:
A revision of current Alternative Minimum Tax provisions.  Specifically, we advocate that the state and local tax “preference/adjustment” item be removed from the calculation of AMT income.  Furthermore, we support expanding exemptions of other income subject to AMT and increasing the AMT income limits altogether.

Make Permanent The Capital Gains and Dividend Tax Rates

Background

The landmark Jobs and Growth Tax Relief Reconciliation Act of 2003 included acceleration of the income tax rate reductions, a temporary expansion of the child credit, bonus depreciation, and temporary reductions in taxes on capital gains and dividends.

However, due to Senate budget rules, the Act’s provisions expire at the end of 2010, and the tax law reverts to pre-enactment levels.

The Northern Kentucky Chamber supports:

Making these temporary tax reductions on capital gains and dividends permanent.  We urge Kentucky members of the 111th Congress to oppose any attempts to modify these important provisions, believing that their proven growth-promoting effects spur capital investment in both businesses and the community at large, thereby creating new jobs.

Ethanol/Biodiesel Tax Credits and Brazilian Ethanol Tariff

Background

Without question, both the demand and future prices of fossil-based fuels have proven to be uncertain and unpredictable. The Chamber believes that the day of increased renewable energy has arrived. To make an orderly transition from crude oil-based fuels to liquefied coal and other renewable fuels, the Chamber supports increased free trade with our international partners who produce renewable fuel additives, such as ethanol from sugar cane, and other cellulosic agricultural crops, such as switch grass.  The current production of 6 billion gallons of corn-based ethanol per year in the U.S. is important, but less crucial when compared to overall demand. Importantly, the increase in demand for corn has had a negative impact on food supply. Last year, American motorists consumed approximately 140 billion gallons of regular gasoline.  U.S. Dept of Energy studies have confirmed that ethanol produced from sugar cane or switch grass can yield four to six times more energy than ethanol produced from corn.

The Northern Kentucky Chamber supports:

A four-year phase out (25% each year) of the current 54 cent per gallon tariff on Brazilian ethanol, beginning in 2009. Further, the Chamber endorses increased support for biodiesel and renewable diesel as well as liquefied coal, believing that a wide array of fuel options will increase competition, and benefit the consumer.