1. Tax Reform that Invests in Thriving Communities
Tax Reform that Invests in Thriving Communities
Coalition of 35 organizations
Public Education Campaign online and social media
Promotes opportunity we have to invest in our Commonwealth by raising more revenue through cleaning up the tax code
April 1, 2017

2. State Budget Funds Key Public Systems
Education
Early childhood education/child care
K-12 education
Higher education
Arts and heritage
Health care
Health care for poor, children, people with disabilities, elderly in nursing homes
Public health
Human services & supports
Child and domestic violence protection
Foster care & adoption
Infrastructure
Roads
Public transit
Water & sewer systems
Environmental protection
Land conservation
Environmental regulation
State parks
Forest management
Home weatherization
Public safety & justice
Court system
State police and prisons
Disaster relief
Consumer & worker safety regulation
Economic & workforce development
Small business development
Workforce training
Tourism
Agricultural development

3. -Tax breaks across all taxes – income, corporate, property
-here’s a video that illustrates our opportunity
Source: OSBD

4. Source: KCEP analysis of Office of the State Budget Director, BEA data

5. Source: Center on Budget and Policy Priorities

6. Source: KCEP analysis of Office of the State Budget Director data

7. Many Other Areas Cut Deeply Since 2008
Kentucky Arts Council 47%,
KET 30%, Libraries 25%
Secretary of State, Attorney General, Auditor 27%-35%
Environmental protection 27%
Vocational rehabilitation 24%
Commission on Human Rights, Women 19%, 25%
Nature Preserves Commission, 23%
Public health 15%
Public defenders 13%
Amounts adjusted for inflation through Source: KCEP analysis of Office of the State Budget Director data

9. Worst State Credit Ratings
47. Michigan
47. Arizona
47. Kentucky
48. New Jersey
49. California
50. Illinois
Source: Pew. 2014

10. What Does Good Tax Reform Look Like?
Limit income tax breaks (deductions, exclusions) & create new bracket and surcharge for higher incomes.
Bring services into the sales tax base; connect with consumer economy.
Close corporate tax loopholes to reduce tax havens & end ineffective incentives.
Freeze property tax cap; allow taxes to grow with economy/property values.
Raise tobacco taxes; account for fiscal, economic and human toll.
Increase hospital provider tax; get hospitals to chip in for great deal that is the Medicaid Expansion.

11. What Has Governor Bevin Said He’s Wanted
Move from “consumption-based” tax system—shifting from income taxes toward sales taxes
Lowering income tax rates
Broadening base, but unclear how
Other potential specifics:
Eliminate inheritance tax
Eliminate inventory property tax

12. “Consumption-Based” Doesn’t Work
Asks low and middle income Kentuckians to pay for tax cuts for those at the top
Weaken revenue growth over time

13. We already have an Upside
Down Tax Code

14. State and Local Taxes Are Upside Down
Those at the Bottom and Middle Pay More as a Share of Family Income
Than Those at the Top
We’re upside down, which most Kentuckians would say is unfair. We’re also missing out on capturing where all the income growth has been…
Source: Institute on Taxation and Economic Policy

15. So in sum…
Source: Institute on Taxation and Economic Policy

16. Lowering Income Tax While Raising Sales Tax:
A tax cut for the wealthy and an increase for a majority of Kentuckians
We’re upside down, which most Kentuckians would say is unfair. We’re also missing out on capturing where all the income growth has been…
-moral choice. Choice is between continuing these tax breaks that end up asking less from those who have more and not funding the programs that help us all. That support the people that you support. That creates an education system that fosters an educated workforce in the Commonwealth now and far into the future.
Shift 25% of income tax to sales tax
Source: Institute on Taxation and Economic Policy

17. Lowering Income Tax While Raising Sales Tax:
A tax cut for the wealthy and an increase for a majority of Kentuckians
We’re upside down, which most Kentuckians would say is unfair. We’re also missing out on capturing where all the income growth has been…
-moral choice. Choice is between continuing these tax breaks that end up asking less from those who have more and not funding the programs that help us all. That support the people that you support. That creates an education system that fosters an educated workforce in the Commonwealth now and far into the future.
Flat income tax of 4.1% no deductions, eliminate pension exclusion, sales tax on groceries
Source: Institute on Taxation and Economic Policy

18. Shift from Income Taxes,
Slow Revenue Growth
Could mean we have to keep increasing sales taxes.
Source: KCEP analysis of OSBD data

19. Could mean we have to keep increasing sales taxes.

20. It Doesn’t Work!

21. Results in Other States

22. The Great Tax Shift Experiment

23. Who’s Shaping Kentucky’s Plan?

24. Results in Other States
Kansas has raised the sales tax rate twice since income tax cuts were enacted in 2012.
North Carolina’s sales tax expansions have paid for only about 40% of $2.5 billion in revenue losses since income tax cuts were enacted in 2013.
Ohio Gov. John Kasich, after the state has been cutting income taxes since 2005, announced this year that there would be a budget shortfall and economic slowdowns.
Tennessee has raised its sales tax rate by almost a penny a decade since 1970.

25. Find Out More
Kentucky Jason Bailey
Here’s how you can see more from Kentucky Together
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