Saturday, June 02, 2001

Tax cap suit ruling

        Effective Jan. 1, Kenton Fiscal Court raised the annual payroll tax cap from $25,000 to $80,400, increasing the tax level to the same as the Social Security cap.

        For some taxpayers, that translated to a 220 percent increase in the tax.

        At issue in the lawsuit was whether Covington taxpayers — workers and businesses — could offset their county payroll tax increase through a credit for taxes paid to the city of Covington.

        Covington and Corporex officials said Kentucky law entitled local taxpayers to that credit. County officials maintained it did not.

        On Friday, Kenton Circuit Judge Patricia Summe, citing state law on county payroll taxes, sided with the city.

        In her ruling, Judge Summe said Kentucky law allows counties of 30,000 people or more, such as Kenton County, to impose payroll taxes of up to 1 percent.

        However, if a county chose to levy payroll taxes on or after July 15, 1986, anyone who paid such a local “occupational license fee” to a city within that county would be entitled to a credit of their city license fee against their county payroll tax, Judge Summe wrote.

        As Kenton County's payroll tax cap increase adopted Nov. 8, 2000, “clearly occurred after 1986, taxpayers who also pay a (local) license fee to a city within Kenton County shall be allowed to credit their city fee against their county fee,” Judge Summe ruled.


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