By Gabe Bullard
Frankfort, KY – A bill that has cleared the Republican-led state Senate would establish a council to suggest changes to the tax structure. Senate President David Williams has expressed support for the findings of a similar commission in Georgia. That body proposed expanding the sales tax to cover more items and dropping the income tax.
University of Kentucky economist Ken Troske says that is one idea to consider, but it may have unintended consequences.
"You do need to be careful about the regressivity of it. Does this hurt poor people more than wealthy people?" Troske asks, "The studies that have been done do suggest that issues of regressivity at the state level we're talking about are less important than federal sales tax type issues."
Tennessee has a similar tax structure. Troske says lawmakers considering tax reform should look to compete with nearby states particularly Illinois, Indiana and Ohio since they are among Kentucky's biggest competitors for jobs and residents. The bill establishing the tax council faces an uncertain future in the Democratically-led House.