• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
Kentucky Center for Economic Policy

Kentucky Center for Economic Policy

      

  • About Us
  • Press Room
  • Donate
  • UnlockKY

Research That Works for Kentucky

  • Topics
    • Budget & Tax
    • Criminal Justice
    • Economic Security
    • Education
    • Health Care
    • Jobs & The Economy
  • Types
    • News
    • Op-Ed
    • Research

      

  • About Us
  • Press Room
  • Donate
  • UnlockKY

Copyright © 2023 KyPolicy Privacy Policy Terms & Conditions Sitemap

Analysis

Report Highlights Kentucky’s Need for More Progressive Income Tax

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.

More On Budget & Tax: New Federal Laws Can Create Opportunities in Kentucky, If We Act on Job Quality and Community Access

This dubious distinction is because the legislature has been unwilling to comprehensively reform its income tax to make its brackets more progressive and to reflect modern income levels. While the state’s income tax system was progressive (meaning that rates increase based on ability to pay) when it was enacted in the 1930s, it has not changed much since then making for an almost flat income tax.

The important exception to the state’s nearly flat income tax is that in 2005 the legislature did exempt families below the poverty line from the tax by creating a credit based on family size. But that credit phases out for low-income families slightly above the poverty line.

Kentucky is not one of the 25 states with an Earned Income Tax Credit (EITC), a measure that has been shown to substantially decrease poverty. An EITC supplements low wages, helps struggling families through economic hard times and can improve children’s prospects of future success. It is designed to assist working parents with children, reaches its maximum benefit for families earning around the minimum wage for the year and phases out for families with income around $45,000 depending on family size.

Passing an EITC would help address the problem identified in the CBPP report and make for a fairer overall tax system. A progressive income tax helps offset more regressive sales and property taxes, which take up a larger share of the incomes of low-income people than they do higher-income people. Analysis by the Institute on Taxation and Economic Policy (ITEP) shows that Kentuckians with less than $15,000 of family income pay 9.4 percent of their income in state and local taxes, while Kentuckians with more than $346,000 of income pay only 7.1 percent of their income in those taxes.

Print Friendly, PDF & Email

FacebookTweetLinkedInEmail

Primary Sidebar

Get KyPolicy news updates in your inbox

Sign Up

Sidebar

Perspectives

The Legislature’s Transportation Budget Cuts Contributed to the JCPS Bus Debacle

Workers at Kentucky’s Largest Employer Could Soon Be On Strike. Here’s What It Means

A Child Care Apocalypse Is Coming

Don’t Hold Our Best Tool for Fighting Hunger as a Political Hostage

The School Year Will Soon End, but a New Strategy to Dismantle Public Education Is Just Beginning

Other Budget & Tax Items

ev charging

Analysis

New Federal Laws Can Create Opportunities in Kentucky, If We Act on Job Quality and Community Access

Untitled design 5

Analysis

Drop in Income Tax Receipts Is a Glimpse of Future Trouble

Untitled design

Analysis

State Budget Changes in 2023 Session Increase Future Risk

Ky. Policy

Footer

Research that works for Kentucky

433 Chestnut Street, Berea, KY 40403

859-756-4605

General information and inquiries: info@kypolicy.org

     

Help us make the facts free and accessible to everyone. That’s how Kentucky will thrive.

Donate

  • Topics
    • Budget & Tax
    • Criminal Justice
    • Economic Security
    • Education
    • Health Care
    • Jobs & The Economy
  • Work
    • News
    • Op-Ed
    • Research
  • About Us
  • Press Room
  • Contact

Get KyPolicy news updates in your inbox

Sign Up

Copyright © 2023 KyPolicy Privacy Policy Terms & Conditions Sitemap

made by P&P
Share this ArticleLike this article? Email it to a friend!

Email sent!