By: Sarah Davasher-Wisdom is Senior Vice President of Public
Affairs & Strategy for Greater Louisville Inc.
Each legislative session has at least one or two major
policy issues that underlie most discussions.
The 2016 Kentucky General Assembly session seems to have found its focal
point in pension reform, and its close relative, the biennial budget.
Tax reform has long been a desire of the region’s business
community and GLI has been at the forefront of that push. While we understand the 2016 session may not
allow time for comprehensive tax reform, the budget woes evident in this
session clearly indicate the need for future reform.
It is vital that Kentucky be competitive with surrounding
states. According to the Tax Foundation,
Indiana was ranked 8th for business tax climate, while Kentucky was
ranked 28th. Tennessee has
the 6th lowest tax rate in the U.S.
This disparity simply won’t do.
So what does comprehensive tax reform look like for the
business community? Our revenue and
expenditure policies should be aligned to promote growth and business investment
while providing resources to meet the Commonwealth’s necessary
obligations. What specifically does this
mean? It is impossible to answer in a
short space, but our tax code should be:
Kentucky’s tax code should be simplified for ease of compliance
and reduced tax administration costs. The legislature should sunset any
outdated tax exemptions and underutilized or ineffective tax credits. For ease
of compliance, the legislature should streamline the application for remaining
tax credits while more rigorously investigating fraudulent claims.
Any reform should strive to be broad-based and should not
impose a disproportionate burden on any specific sector or industry. To reduce
the exorbitant tax burden on businesses large and small in the Commonwealth,
Kentucky should decrease the personal and corporate income taxes and the
Limited Liability Entity Tax (LLET). The business inventory tax should be
The tax code should transition to be more consumption-based
for increased competitiveness. Revenue measures should adjust Kentucky to a
consumption-based tax system. Kentucky should increase the cigarette tax,
expand gaming in the state, and reduce current tax exemptions on retirement
Comprehensive tax reform is critical to the economic future
of the Commonwealth. Let’s create a
landscape where overall revenue increases because of solid economic
growth. GLI looks forward to working
with Governor Bevin and the Kentucky General Assembly to accelerate growth and
create a better climate for business.