Economists present a number of options for tax reform

Yesterday, members of the Governor’s Blue Ribbon Task Force on Tax Reform heard from a team of consultants that Kentucky must change the way it taxes both businesses and individuals if it is to see economic growth in the near future. With the tax code in its current form, the economists predicted the state could see a $1 billion revenue gap by the year 2020, just to continue providing basic services. The report also stresses the need to make business taxes more competitive.

Three economists, William Hoyt and Michael Childress, both of the University of Kentucky, and William Fox of the University of Tennessee were hired as consultants for the task force and made several policy recommendations in a 114-page study.

Among significant importance to the business community were their recommendations that Kentucky both broaden its tax base – increasing the number of individuals and businesses paying taxes would allow them all to do so at a lower rate – and moving away from taxing business capital and labor. Instead, they argue a shift toward more consumption taxes would improve our competitiveness.

Members of the task force are expected to review the consultants’ recommendations and compile their own set of recommendations to be presented to the Governor by November 15. The Chamber has played an active role in informing the task force of the business case for tax reform. The Chamber is prepared to support pro-business tax reform that will improve Kentucky’s competitive position; however, we are carefully monitoring the process and will vigorously oppose attempts to simply raise revenue by increasing the cost of doing business in Kentucky. Tax reform can help employers grow jobs and raise revenue through economic growth to support important investments if we do it the right way. The Chamber welcomes member feedback on this and other issues. Contact us at

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