KY Policy Blog

What Would Kentucky Gain from More Business Tax Cuts?

By Jason Bailey
October 10, 2012

For a state like Kentucky—with high levels of poverty, low wages and too few jobs—a perpetual issue is how government can do more to promote prosperity. For years, the state has focused heavily on reducing business taxes and providing special tax incentives with the hope of attracting industry.

In truth, business tax cuts are not a formula for long-term economic development. Yet a focus on that strategy continues in the recently-released consultants’ report to Governor Beshear’s Blue Ribbon Tax Reform Commission.

The report argues that Kentucky needs to improve its read more

Taxing Groceries Not a Good Strategy for Kentucky

By Ashley Spalding
October 1, 2012

The recently released consultants’ report to the governor’s tax reform commission included the option of applying Kentucky’s sales tax to food for home consumption (i.e., groceries). While broadening the tax base is an important strategy to raise and sustain revenue, a tax on groceries would make Kentucky’s tax system less equitable. And because groceries are a shrinking portion of what people consume, it could worsen Kentucky’s long-term revenue problems.

Kentucky applied the sales tax to groceries until 1972 when it exempted them for tax fairness reasons. As a share of read more

Senior Tax Breaks Don’t Attract Migrants

By Jason Bailey
June 1, 2012

Those arguing for state income tax cuts often claim that such cuts will result in the relocation of large numbers of people from other states, but the economic evidence simply doesn’t support those claims. As a recent survey of the research showed, people don’t migrate much in general, and those that move do so largely for family reasons or because they are attracted by quality of life, housing costs, job opportunities or weather—not taxes.

One variant on this claim is that tax cuts for seniors will make a state a read more

What Are Taxes For?

By Ashley Spalding
April 13, 2012

Tax Day is an important time for Kentuckians to consider the role of government in our state and nation. Taxes are a critical tool for doing things together that we cannot do alone. They support investment in education, health care, infrastructure, social services and other public structures essential for the common good in Kentucky.

These days, taxes are the subject of great controversy. But the investments paid for by tax dollars play a unique role in: advancing economic development; contributing to improved health and safety; creating educated workers and citizens; read more

Report Highlights Kentucky’s Need for More Progressive Income Tax

By Jason Bailey
April 4, 2012

A report released today by the Center on Budget and Policy Priorities (CBPP) shows that income taxes for Kentucky families slightly above the poverty line are among the highest in the nation for that income group.

The report says that in 2011 a two-parent family of four in Kentucky with income of only $28,773 (25 percent above the poverty line) paid $1,021 in state income taxes, an amount higher than any other state.

This dubious distinction is because the legislature has been unwilling to comprehensively reform its income tax to read more

Blue Ribbon Commission on Tax Reform Launches Website

By Ashley Spalding
March 8, 2012

The Blue Ribbon Commission on Tax Reform launched a website this week to provide information about the commission process and ways for everyday Kentuckians to get involved. The commission has been tasked with recommending changes to Kentucky’s tax code by mid-November, after studying the state tax system and reviewing input from the public and interested parties.

The website includes the schedule of commission meetings (the first was held on Tuesday), which are open to the public:

Public Meeting Schedule

(All times are local)

Tuesday, March 6, 2012, 12:30-3:30 p.m. Transportation read more

Tax Expenditures Big Cause of Budget Problems, but Some Legislators Want More

By Jason Bailey
February 24, 2012

There are three main reasons that the budget the legislature is now considering includes so many cuts. First, the economy is still struggling. Second, federal recovery-related financial assistance to the states is gone. And third, Kentucky’s tax system needs to be reformed. One reason for the third problem is that the General Assembly typically puts in place new “tax expenditures” every time it meets.

Tax expenditures are special tax preferences, rates or exemptions that benefit particular groups, industries or activities. Just like spending on the budget, they are a way read more

Inadequate Tax System Has Big Role in Austere Budget

By Jason Bailey
January 24, 2012

While the still-weak economy and the end of federal recovery-related assistance are important factors in the tight budget now being considered in Frankfort, long-term structural problems with Kentucky’s tax system also play a big role.

Economists say that a state’s tax revenue should grow in line with its economy in order to keep up with approximate growth in costs. Kentucky’s General Fund revenue has been declining as a share of the economy for a long time, and that trend is expected to continue over the next two years (see the read more

Op-Ed: Kentucky Must Invest, Reform Tax Code to Progress

By Jason Bailey
March 18, 2011

Published in the Lexington Herald-Leader.

Lawmakers left Frankfort last week without agreement on closing the hole in this year’s Medicaid budget, and are convening this week to give it another try. A point of contention between the chambers has been whether to include additional across-the-board cuts to a range of state services.

The House and Governor Beshear argue that more cuts aren’t necessary, while the Senate claims that cuts now will prevent bigger cuts later.

But before the legislature makes any more cuts—now or next year—it should consider that they read more