Herald-Leader Says "Tax Reform" and Doesn't Necessarily Mean "Tax Increase"
Herald Leader columnist Tom Eblen penned a column this Sunday about the need for tax reform in Kentucky. Often when folks like Tom Eblen say tax reform it's their way of avoiding saying tax increases, especially on employers, to pay for more government spending.
This time however, he rejects the Representative Jim Wayne (2208 rank #90) make sure the "rich" are paying more approach and votes in favor of a proposal by Representative Bill Farmer (2008 rank #10).
Farmer is advocating abolishing income taxes in Kentucky. In exchange, the sales tax would be applied to more things, especially services. In his version, the sales tax would actually be reduced by 0.5%, from a 6% tax to 5.5%.
Abolishing income taxes in Kentucky would make the state a very attractive place to live and locate your business, and a broader sales tax is a good approach because sales taxes are discretionary. That is, you are only taxed on what you choose to consume; you don't have any choice about making an income.
Farmer retains exemptions on essentials like groceries and health care. The Kentucky Club for Growth is concerned about some of the services that are included, but appreciate Farmer's effort in beginning this dialogue about what would be a more business-friendly tax code in the state.
Surprisingly, Tom Eblen has caught on as well:
While I admire the social justice idealism behind Wayne's plan, I think Farmer's approach would be better for Kentucky's future, for many reasons.
Farmer's plan makes Kentucky more economically competitive with other states. It encourages people to make money and save money. It encourages businesses and financially successful people to come here and stay here, increasing the amount of money that will be spent on taxable goods and services.
Farmer's plan would be easy for the public to understand. It also would be an easy, cheap and effective way for the state to collect revenue. As the economy grows, tax revenues would grow with it.
It would be important that lawmakers keep such a sales-tax system "pure" -- in other words, not exempt some products and services for reasons other than to protect poor people. Otherwise, the special-interest lobbyists will have a field day and the system won't be fair.
Also, it would be important to remove many existing state taxes and fees that unfairly target -- or exempt -- certain businesses, products and people.
Well said.
