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March 9, 2016 7:37pm

The Key to Future Growth? TAX REFORM

By: Sarah Davasher-Wisdom, Senior Vice President of Public Affairs & Strategy

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 pensiaaeaaqaaaaaaaaaqaaaajdaznjq1yzlhltrhn2itndlhny04odzlltjkmmewywfmywvjmaon 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 The legislature should sunset any outdated tax exemptions and underutilized or ineffective tax credits.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 eliminated.


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 income.

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.