Earlier this week President Donald Trump released a blueprint for changes he’d like to make to the country’s tax code. Though specifics are still unclear, under one portion of the new plan, corporations–including Kentucky’s most profitable companies—would get a tax break.
Trump’s proposal would lower the corporate tax rate from 35 percent to 15 percent, reducing tax revenue into federal coffers by an estimated $2 trillion over 10 years, according to the Tax Foundation, a D.C.-based think tank.
Tyler Houlton, director of federal affairs at libertarian-leaning Americans for Prosperity, said the move would spur economic growth.
“If you get a tax cut across the board, which we support, that helps everyone,” he said. “You can hire more people, you can expand your business things like that. That helps drive the economy, create economic growth.”
Louisville-based Humana employs more than 50,000 people and made more than $54 billion in 2015. Under Trump’s plan, the company would have a base tax rate that’s about $11 billion less than it is currently.
For Yum! Brands, with more than 500,000 employees and revenues of more than $13 billion in 2015, the plan would cut a little more than $2.5 billion from its base tax rate.
The plan would also reduce the number of tax brackets for individuals, dividing Americans into groups that are assessed either 10, 25 or 35 percent. The wealthiest Americans would fall into the lower tax bracket.
Jason Bailey, director of the progressive Kentucky Center for Economic Policy, said the overall effect of the plan would mean less money for the government.
“We are a poor state,” Bailey said. “So, money for education, for infrastructure, for healthcare for human services, economic development. All those moneys will be squeezed even more from a plan like this that again cuts revenues by cutting taxes for people at the top.”
According to a study conducted by Wallet Hub, a personal finance website, Kentucky is more dependent on federal funds than any other state in the U.S.
The study was based on how much federal funding states receive compared to state revenue, share of federal jobs and how much Kentuckians pay in federal income taxes.
Trump also wants major cuts to the federal budget, including cuts to some agency budgets and the elimination of other programs altogether. He also wanted an increase of $560 million to the defense budget.
The plan would also eliminate the inheritance tax, which is currently taxed at the federal level only when estates are larger than $5.4 million per individual.
Supporters say the tax proposals would stimulate the economy, encouraging Americans to buy more goods and companies to hire more workers.
Meanwhile, Kentucky is considering changes to its own tax code. Gov. Matt Bevin said he wants state lawmakers to return to Frankfort this year for a special legislative session to discuss tax and pension changes.