The special legislative session tentatively set for later this year will supposedly address two issues: shoring up the state’s ailing pension system -- which I discussed last week -- and reforming its current tax system.
It’s clear that significant changes to Kentucky’s taxing strategy are long overdue, all of which should be aimed at generating more money. Politicians like to promise that any tax raised by new legislation is offset by equal cuts in other taxes. But at this point, such a “revenue-neutral” tax reform, in our case, will solve nothing.
Many essential programs, like higher education, are already practically on life support due to continued cuts in their budgets. Meanwhile, our physical infrastructure and pension system will simply crumble without a serious injection of new money.
But what to do? Several states, Tennessee for one, have raised more money by actually eliminating some taxes – specifically, their income tax – while raising consumption-based taxes like sales taxes. This may seem counter-intuitive, but having no income tax has attracted many new businesses, and has increased overall tax revenues.
I think this is an idea that merits serious consideration in Kentucky. But I know others disagree. So I’d like to know how you’d tackle the problem. Call and tell us.
I’m Bill Lamb and that’s my Point of View.
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