A left-leaning Washington D.C. think tank, Center on Budget and Policy Priorities(CBPP), has found that Kentucky has the highest income tax in the nation on a family of four at 125% of the poverty level.
CBPP reports a two-parent family of four in Kentucky with $26,504 in 2007 income would owe state income tax of $923. This is effectively a transfer of the federal Earned Income Tax Credit to Kentucky’s general fund.
The report lists Kentucky as one of only eighteen states that hits two-parent families of four with any income tax at all.
Rep. Bill Farmer (R-Lexington) has announced plans to file a bill for the 2009 General Assembly to eliminate Kentucky’s income tax and replace it with consumption taxes.