Kentucky has the opportunity to meet its infrastructure challenges through planned investments in President Biden’s American Jobs Plan and American Families Plan. From the lack of clean water and reliable bridges to high-speed internet and quality childcare, these challenges hold back our communities and our economies. The family and employment plans would provide the necessary resources to unleash our potential.
The need to invest in Kentucky’s physical and human needs is urgent. Kentucky’s infrastructure, including bridges, dams, drinking water, roads, and sewers, was rated C by the American Society of Civil Engineers, and 12 percent of Kentucky residents live in a “broadband desert” with no reliable internet access. Half of Kentuckers live in areas with inadequate childcare facilities and more than one in five children live in poverty.
To address the long-term lack of infrastructure investment in Kentucky and across the country, the Jobs and Families plans would provide $ 115 billion to repair roads and bridges, $ 111 billion to provide safe drinking water, and $ 50 billion – Put dollars to protect the country’s infrastructure from extreme weather events.
The Jobs and Families plans would also raise funds to improve health care for 295,000 Kentucky veterans, expand health coverage to 61,000 uninsured Kentuckers, lift 66,000 children out of poverty with expanded child tax credits, and provide a preschool for 65,000 three- and four year olds, among numerous other investments.
To offset the cost, the plans would reclaim several tax breaks that were passed in 2017 that brought in profitable businesses and people with annual incomes greater than $ 400,000. These provisions include restoring the corporate income tax rate to 28 percent, still lower than the 35 percent rate that was in place before the 2017 Tax Act cut; and the increase in the highest income tax rate for “ordinary” income to 39.6 percent, where it stood before it was lowered to 37 percent under the 2017 Tax Act.
The plans would also restrict an older and very expensive tax break for wealthy investors: the top 20 percent tax rate on capital gains (profits from the sale of assets) and stock dividends, which is much lower than tax rates on “ordinary” income like wages. This tax break has long allowed people who live off their wealth to pay lower tax rates than people who work for a living. The proposal would remove that hiatus for millionaires. Any taxable income over $ 1 million will be taxed at the same rate of 39.6 percent, regardless of whether it is capital gains, dividends, or ordinary income.
A recent study by the Institute on Taxation and Economic Policy (ITEP) found that only about 5,300 tax filers, about 0.2 percent of all Kentucky filers, would be affected by the proposed increase in capital gains and dividends over the next year. The rapidly growing wealth at the top by allowing this loophole is of no use to the Kentuckians as it increases offshore bank accounts, funds extravagant luxury, and creates new dynasties in one of America’s poorest states.
Taxing wealthy millionaires’ income, just as we tax everyone else’s income from work, would pay for investments that benefit our entire community – from young children and aging veterans to business owners and working families – and pave the way for common economic ones Level prosperity.
These revenue proposals, including the capital gains and dividends change, are sensible reforms that would make our tax law fairer and help create the conditions for all Kentuckers to thrive, not just a small millionaire population.
Pam Thomas is a Senior Fellow at the Kentucky Center for Economic Policy.