The Institute on Taxation and Economic Policy (a D.C.-based “think tank”) has released a new report on Kentucky’s inadequate tax structure.
The report, Tax Reform in Kentucky: Serious Problems, Stark Choices, examines two key problems with Kentucky’s tax structure. It’s not only insufficient, failing to produce enough revenue for public services, but is also inequitable, forcing low-and-middle-income residents of the Commonwealth to pay more in taxes than wealthier individuals and families– relative to their incomes.
Two tax measures presented to the Interim Joint Committee on Appropriations and Revenue (last week) are also examined. Bill Farmer introduced House Bill 51 PHS (repeal personal and corporate income taxes, repeal limited liability tax, reduce sales tax to 5.5%), which would seriously exacerbate the main problems we’re facing by aiding the wealthy. And HB 262/HB 223 (raise taxes for the super-wealthy, offer tax credit based on earned income, reinstate estate tax, lowering taxes for the poor), presented by Jim Wayne, would improve the adequacy and equity of the system.
You’ll want to check the report out for yourself:
CLICK FOR PDF
Our favorite bit of the report? This bit about Farmer’s ridiculous HB 51, showing that had the legislation been implemented in 2007, the provisions would have:
- Increased taxes markedly for the very poorest Kentuckians. Families and individuals with 2007 incomes below $14,000 would have, on average, paid $136 more in taxes had HB 51 PHS been in effect; this is the equivalent of 1.6 percent of their income on average.
- Reduced the taxes paid by middle-class Kentuckians by roughly 1.1 percent of income on average. That is, Kentucky taxpayers with incomes ranging from $27,000 to $45,000 in 2007 would have seen their taxes go down by $373 on average if HB 51 PHS had been made law.
- Reduced taxes dramatically for the very wealthiest Kentuckians. In 2007, the top 1 percent of Kentucky taxpayers consisted of individuals and families with incomes in excess of $329,000. These taxpayers would have received an average tax cut of $40,910 – or 4.4 percent of income – due to the changes contained in HB 51 PHS.
Obviously not a good thing for most Kentuckians.
What’s your favorite part of the report?
Observation: Let’s not hold our breath about real tax reform in Kentucky. It’s pretty clear that no one in Frankfort is going to answer our prayers.