February 27, 2020 10:08am
GLI testifies in support of local government tax reform
In Frankfort this afternoon, GLI expressed the greater Louisville business community’s strong support for local government tax reform. GLI’s Vice President of Government Affairs and Public Policy Iris Wilbur Glick testified in favor of House Bill 475, sponsored by House Local Government Chairman Michael Meredith. This legislation would amend the state constitution to allow the General Assembly to reform local government taxation.
“Our current local tax structures are severely outdated and rely too heavily on production-based taxes like the occupational licensing tax. … We need to make sure that cities and counties in Kentucky can compete with the Nashvilles and Charlottes for jobs, new businesses, and talent on an equal footing,” said Wilbur Glick.
Kentucky’s constitution places outdated restrictions on local government taxation that ultimately prohibit the development business-friendly city and county tax structures. House Bill 475 is the first step in the process of enacting pro-growth reforms. If this legislation is approved by the General Assembly in the 2020 session and supported by Kentucky voters in November, it will clear the way for lawmakers to work in the 2021 session to craft a new, modernized framework to facilitate local government tax codes that promote economic growth and business competitiveness throughout the Commonwealth.
Local government tax reform is vital to improving Kentucky’s business competitiveness, bringing in new businesses and corporate headquarters to our region, and helping employers attract and retain top talent.
With GLI’s support, House Bill 475 passed out of the House Committee on Elections, Constitutional Amendments, and Intergovernmental Affairs today. Representatives from the Kentucky League of Cities and the Kentucky Association of Counties also testified in support of the legislation.
Read GLI’s full testimony below.
GLI represents more than 1,700 businesses throughout the greater Louisville region. Our members strongly support House Bill 475, and we sincerely appreciate Representative Meredith’s leadership on this critical issue and we also thank the more than 50 co-sponsors who have stepped up to voice their support for this legislation.
House Bill 475 presents the General Assembly with an invaluable opportunity to rethink and recreate city and county government taxation in the Commonwealth. This is sorely needed to build more competitive local tax structures to support economic growth, promote business development, and attract and retain top talent.
Our current local tax structures are severely outdated and rely too heavily on production-based taxes like the occupational licensing tax. In plain terms, we are talking about taxes on wages and business income. This overreliance by Kentucky cities and counties on local income taxes places regions like greater Louisville at a competitive disadvantage with areas such as Nashville or Charlotte, where their local tax codes allow them to remain competitive in a rapidly changing economy. We need to make sure that cities and counties in Kentucky can compete with the Nashvilles and Charlottes for jobs, new businesses, and talent on an equal footing.
In recent sessions, the General Assembly has begun the process of modernizing our state tax code by balancing out Kentucky’s historical reliance on production-based taxes with a greater emphasis on consumption-based taxes. This has helped Kentucky move from 37 to 24 in tax climate rankings. This has been a good thing for our economy, and it is allowing our state to compete for economic growth with our surrounding states. But the impact of state tax reform will never be fully realized without broad-based reforms at the local level as well. Let’s extend those same principles from 2018 tax reform and apply at the local level. The business community stands ready to pursue that framework with the legislature.
We urge lawmakers to support House Bill 475 so that we can start the process of reforming local government taxation in Kentucky and giving cities and counties throughout the Commonwealth the ability to thrive in today’s 21st century economy. Thank you.