Tax Reform Consultants Hired, Some Hope for Reform
The Governor's Tax Reform Commission has finally announced the contracts of three consultants to advise the tax reform discussion, and we are slightly encouraged by the two economists and one analyst who have been selected.
William Fox of the University of Tennessee warned a decade ago that Kentucky's tax structure lacked flexibility to capture revenue from a changing economy, and predicted the state's current economic woes. The "Fox Report" as it is still called, recommended broadening the sales tax base to expanding services such as auto repair or tax preparation.
Beshear's news release on Wednesday announcing the hiring of Fox did not mention Fox's previous work for the state.
The commission also has hired William Hoyt, director of the Martin School of Public Policy and Administration at the University of Kentucky, and Michael Childress of the Center for Business and Economic Research at UK's Gatton College of Business and Economics.
Dr. Fox's work is an often-referenced analysis of Kentucky's tax code. Although several of the recommendations from the report were enacted by Governor Fletcher's tax reform effort, many of the report's philosophical themes are frequently quoted without action. His objective 2002 analysis will surely be updated for the Commission.
Childress is the former executive director of the Kentucky Long-Term Policy Research Center, and a strong and objective analyst.
Hoyt's economic expertise seems to lean towards local taxation issues, but has published several papers on Kentucky's tax code, including this 2000 study that argues that Kentucky's tax code is significantly more progressive than our neighboring states or southern states on average. His analysis seems to be that of an objective economist as well.
We had previously predicted that the Governor's Tax Reform Commission would be a venue to propose tax hikes, and still worry about that result. We also expected that the hiring of consultants would reveal a progressive bias to the efforts. This, so far, is not the case.