Kentucky's Tax Structure Is Not Fair
Our tax structure
holds Kentucky back
"My family is at our library at least once a week to keep current on our reading and to introduce our 3-year old and our 8-month old to the world of books. It seemed like my local library always had a shelf full of new books on display. Now I only see a handful.”
"I decided to return to school for nursing, but when I looked into the program at Western, I was shocked. When I started there in 1999, going full-time cost me $1,100 dollars. Now, a mere 13 years later, it costs over $4,000 dollars. That's a semester! What's happened here is the drastic defunding of my alma mater, and all of our universities and colleges, and a shift of the cost of education from the General Fund to the student. And the real world result is students leaving school with crippling debt."
Kentucky’s tax structure is skewed, asking the most from those who earn the least, and asking the least from those who earn the most.
Check out this graph from the Institute on Taxation and Economic Policy to see how our state and local taxes impact Kentucky families:
Low- and middle-income Kentuckians pay about 11% of their income to state and local taxes, while the state’s wealthiest 1% pay about 6% of their income to state and local taxes. This is called a regressive system.
Reforms like the Earned Income Tax Credit and a more progressive income tax can make our tax structure fairer.
The graph also shows the important role of Kentucky's income tax
The red, green, and blue bars show the impact of our sales tax, our property taxes, and our income taxes. If you focus on the red bars, the sales tax, you can see just how regressive the sales tax is. Low-income folks pay about 5.5% of their total income in sales taxes, while the wealthiest 1% don’t even pay 1% of their income in sales taxes. This is why a system like Tennessee’s, which is almost entirely dependent on sales taxes, would be so harmful to most Kentuckians.
The income tax – shown in the dark blue bars – is imperative in mitigating the regressive impact of our sales tax. Kentucky’s income tax is our most progressive, most stable, most elastic tax. We need to strengthen it.
See also: Kentucky's tax structure is inadequate