SENATE WEEK IN REVIEW

By Denise Harper Angel

FRANKFORT — Lawmakers have returned to Frankfort in a special session to bring tax relief to thousands of small businesses across the Commonwealth.

The improvements approved by the House, and now under consideration in the Senate, are in line with business priorities. We would:

• Eliminate the tax for businesses with less than $3 million in annual gross profits or gross receipts, but no net profit, beyond a $175 minimum. Other businesses that earn between $3 million and $6 million in yearly gross profits or receipts would get varying degrees of relief.

• Conform to federal language on the "pass through" -- allowing small business income to be taxed with an attachment to the individual return of the owner, as does the federal government. Under the Governor Fletcher's tax modernization, Kentucky no longer recognized "pass-through"' status, resulting in two very different tax systems and a great deal of confusion and consternation among Kentucky taxpayers.

• Cut the top corporate tax rate to 6 percent, effective next January, as planned.

The bill would correct problems created by the Governor's 2005 "tax modernization" plan. Under the Governor's plan, small businesses were required to pay taxes under a provision known as the "alternative minimum calculation (AMC)," even when they didn't make any money.

It's unfortunate that these improvements were not made during the regular session. However, we have reached a compromise, and because the plan has the support of the leaders of both chambers, we hope this special session will be a short, but effective one.

Small business is the backbone of the Kentucky economy. Ninety-three percent of Kentucky businesses have fewer than 50 employees and more than half employ 10 people or less. According report issued by the state Cabinet for Economic Development earlier this year, small business provides nearly one-third of all wages and benefits for Kentucky workers. Clearly, the General Assembly needs to do all that it can to nurture small business. Improving the tax code is a step in the right direction.

If there's an issue you have a comment on, I hope you'll share your thoughts with me by calling the General Assembly's Toll-Free Message Line at 1-800-372-7181 or e-mail me at deniseharper.angel@lrc.ky.gov.