In Kentucky, the income inequality that exists between our poorest and wealthiest residents is magnified by the structure of our tax system. And thanks to the new tax law enacted by the 2018 General Assembly, that problem is getting worse.
ITEP Work in Action
Advocates and policymakers at the state and federal levels rely on ITEP’s analytic capabilities to inform their debates on proposed tax policy changes. In any given year, ITEP fields requests for analyses of policies in 25 or more states. ITEP also works with national partners to provide analyses of federal tax policy proposals. This section highlights reports that use ITEP analyses to make a compelling case for progressive tax reforms.
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ITEP Work in Action October 18, 2018 Kentucky Center for Economic Policy: New Report Shows Kentucky’s Tax System Worsens Income Inequality
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ITEP Work in Action October 18, 2018 Message-Inquirer: Tax Study Explores ‘Who Pays?’ in Kentucky
A new study from a national economic policy research group suggests Kentucky’s tax structure has become less equitable since the last General Assembly’s tax reform legislation, putting more tax obligation on poor and middle-class Kentuckians.
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ITEP Work in Action October 17, 2018 Kentucky Center for Economic Policy: New Report: Wealthiest Kentuckians Pay the Lowest Tax Rate and the Problem Is Worsening
The study, Who Pays? A Distributional Analysis of the Tax Systems in All 50 States, evaluates the major components of state and local tax systems – including personal and corporate income taxes, property taxes, sales taxes and other excise taxes – for their overall distributional impact across income groups. For example, Kentucky’s low income tax credit means that people in poverty do not pay state income taxes. However, because the state fails to provide refundable tax credits to offset sales, excise and property taxes paid by low-income people, and because the state has a flat as opposed to graduated income tax rate structure, the poorest 20 percent of Kentuckians pay an effective tax rate 1.42 times higher than that paid by the top 1 percent.
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ITEP Work in Action August 22, 2018 Kentucky Center for Economic Policy: Clean Up the Tax Code to Invest in Our Commonwealth
To move our tax code in the right direction, Kentucky should rejoin 32 other states with a graduated income tax based on ability to pay. Income below $37,500 single/$75,000 married… -
ITEP Work in Action April 20, 2018 Kentucky Center for Economic Policy: New Tax Law Shifts from the Wealthy to Kentuckians of Color and Economically Distressed Regions of State
In the waning days of the 2018 General Assembly, legislators passed House Bill 366 (HB 366), a regressive tax reform package that gives a tax break to the wealthiest but asks more of everyone else, especially low-income Kentuckians. In addition to widening income disparities, these changes will exacerbate existing racial and geographic inequality in our state.
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ITEP Work in Action April 2, 2018 Kentucky Center for Economic Policy: Tax Plan Is a Tax Shift with Troubling Long-Term Effect on Revenues
The General Assembly introduced a tax bill today that is a shift in taxes away from corporations and high-income people and over to low- and middle-income Kentuckians. Although the official… -
ITEP Work in Action December 21, 2017 Kentucky Center for Economic Policy: Passage of the Dream Act Would Benefit Kentucky
The Institute on Taxation and Economic Policy (ITEP) estimates that 6,000 (formerly) DACA-eligible Kentuckians currently contribute a total of $8.1 million in local and state taxes annually through sales and… -
ITEP Work in Action November 21, 2017 Senate Tax Plan Harms Low- and Middle-Income Kentuckians to Pay for Giveaways to Those at the Top
Senators will return to Capitol Hill next week after the Thanksgiving recess for a potential vote on their revised plan. According to estimates from the Institute on Taxation and Economic Policy (ITEP), the bottom 60 percent of Kentuckians, who make an average of $37,500 a year, will actually face more taxes from the plan with an average increase of $80 in 2027.
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ITEP Work in Action July 21, 2017 Kentucky Center for Economic Policy: Trump Tax Plan Would Be a Windfall for Only the Wealthiest Kentuckians
The wealthiest Kentuckians would be winners from the $4.8 trillion in federal tax cuts President Donald Trump has proposed, as shown by a new report from the Institute on Taxation… -
ITEP Work in Action June 8, 2017 Kentucky Center for Economic Policy: Troubling Hints About Direction for Tax Reform
The corporate tax cuts described above mean profitable businesses chip in less for the public services that help them succeed. And the result of less reliance on income and inheritance taxes is clear (see graph below): those at the top in Tennessee and Indiana pay an even smaller share of their income in state and local taxes than the wealthiest Kentuckians do, and their lowest-income residents pay an even higher share than the poorest Kentuckians.
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ITEP Work in Action May 22, 2017 Kentucky Center for Economic Policy: Any Way You Slice It, A Shift To Consumption Taxes Will Hurt Kentucky
According to ITEP, replacing all of Kentucky’s income tax revenue with sales tax revenue would require an increase in our sales tax rate to 13.3 percent – more than double… -
ITEP Work in Action April 17, 2017 Kentucky Center for Economic Policy: What Good Tax Reform Looks Like
In contrast, HB 263 would ask more of those at the top and less of low- and middle-income people who currently pay a larger share of their income in taxes.… -
ITEP Work in Action April 12, 2017 Kentucky Center for Economic Policy: Taxing Groceries in Kentucky Would Hurt Low-Income Families, Weaken Revenue Growth
Lower-income families therefore receive the most benefit from the exemption for groceries. Repealing it would disproportionately increase the share of income they pay in taxes, making Kentucky’s tax system more regressive than it already is.
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ITEP Work in Action April 3, 2017 Kentucky Center for Economic Policy: Undocumented Immigrants Contribute $37 Million Toward Investments in Kentucky Each Year
Undocumented immigrants living in Kentucky pay $36.6 million in state and local taxes each year, according to a new report from the Institute on Taxation and Economic Policy. These substantial… -
ITEP Work in Action March 23, 2017 Kentucky Center for Economic Policy: Tiny Fraction of Wealthiest Kentuckians Gain from Tax Cuts in Health Repeal
The House plan to repeal healthcare reform, known as the American Health Care Act (AHCA), provides a tax cut to the wealthiest people while reducing the number of Americans with health… -
ITEP Work in Action February 21, 2017 Kentucky Center for Economic Policy: The Math Behind Ed Choice Tax Credit Fails Many Tests
Today in the House Education Committee legislators are hearing discussion of House Bill 162, a proposal to create a so-called Education Choice tax credit in Kentucky. This proposal does not… -
ITEP Work in Action February 1, 2017 Kentucky Center for Economic Policy: Refugees, Immigrants Important to Kentucky and the Economy: An Overview of the Research
From the promise to build a wall paid for by tariffs on Mexican imports and uncertainty about what will happen to DACA (which allows undocumented immigrants whose parents brought them… -
ITEP Work in Action January 10, 2017 Kentucky Center for Economic Policy: A Preview of the 2016-2018 Kentucky State Budget
A comprehensive preview of the upcoming two-year Kentucky state budget confirms both a massive funding gap facing the state for the next two years and a need for reinvestment… -
ITEP Work in Action January 10, 2017 Kentucky Center for Economic Policy: 2016 Kentucky Budget Primer
The Budget of the Commonwealth is a financial plan, enacted every two years by Kentucky’s General Assembly, that maps out our state’s investments in education, health, transportation, public safety,… -
ITEP Work in Action January 10, 2017 Kentucky Center for Economic Policy: Inheritance Tax Repeal Is Giveaway to the Top Kentucky Can’t Afford
Since 1906, Kentucky has relied on the inheritance tax to help pay for the good schools, infrastructure and other investments that strengthen the Commonwealth. A repeal of the inheritance… -
ITEP Work in Action December 13, 2016 Kentucky Center for Economic Policy: Those at the Top Would Get More Tax Breaks, Investments Would Suffer from Shift to Consumption Taxes
“The table below shows the impact, by income group, of two such hypothetical shifts. Notice that even when the shift is seemingly minor – one penny less on the dollar… -
ITEP Work in Action February 8, 2016 Kentucky Center for Economic Policy: Revenue Options that Strengthen the Commonwealth
“By generating new revenue to invest in the building blocks of our s.tate, good tax reform will make Kentucky stronger for all. This menu of tax reform options describes some… -
ITEP Work in Action October 21, 2015 Kentucky Center for Economic Policy: Reinstating Kentucky’s Tax on Extreme Wealth a Part of Making State Taxes Fair and Adequate
Kentucky loses an estimated $25 million a year because state lawmakers haven’t yet taken steps to recoup lost revenue from federal estate tax changes that essentially eliminated the state’s estate… -
ITEP Work in Action March 26, 2015 Kentucky Center for Economic Policy: Inaction on Gas Tax Will Drop Rate to Historically Low Levels
Good roads are critical to public safety and to Kentucky’s economy, especially in a state so dependent on manufacturing and distribution industries. Funding from the gas tax and other sources… -
ITEP Work in Action January 16, 2015 Kentucky Center for Economic Policy: Kentucky’s Upside Down Tax System Asks the Least of Those at the Top
In Kentucky, the wealthiest residents pay the lowest overall state and local tax rate as documented in a new edition of a study by the Institute on Taxation and Economic… -
ITEP Work in Action May 22, 2014 Kentucky Center for Economic Policy: State EITC Would Make a Regressive Tax System Fairer
Previous posts have described how a state Earned Income Tax Credit (EITC) would help working low-income Kentuckians make ends meet and reach every corner of the state. A state EITC… -
ITEP Work in Action March 20, 2014 Kentucky Center for Economic Policy: While Kentucky’s Budget Faces More Cuts, Profitable Fortune 500 Companies Avoid Paying State Corporate Income Taxes
As Kentucky and other states struggle with tough budget decisions about essential public services, profitable Fortune 500 companies including Kentucky-based Yum Brands and Humana pay little to nothing in state… -
ITEP Work in Action February 10, 2014 Kentucky Center for Economic Policy: Measuring the Tax Plan Against Key Principles
Governor Beshear has released his tax reform proposal, and analysis and debate over the plan has begun. It’s important that this discussion keep in mind three principles that are needed… -
ITEP Work in Action February 7, 2014 Kentucky Center for Economic Policy: Tax Plan Misses Opportunity to Make Overall Tax System Fairer
The combined impact of the tax increases and tax cuts in Governor Beshear’s reform proposal would not help improve the regressive nature of Kentucky’s tax system, according to analysis of… -
ITEP Work in Action January 14, 2013 Kentucky Center for Economic Policy: Using the Federal Income Tax Cuts to Help Address Kentucky’s Budget Challenge
The federal tax compromise passed by Congress in December resulted in extensions to a number of tax changes set to expire and provided a large tax break to the wealthiest… -
ITEP Work in Action January 14, 2013 Kentucky Center for Economic Policy: Reforms Needed to Bring Greater Scrutiny to “Tax Expenditures”
Every year Kentucky loses billions of dollars in revenue through special tax preferences and breaks for individuals and businesses that are written into the tax code. Yet there is very… -
ITEP Work in Action January 14, 2013 Kentucky Center for Economic Policy: Farmer’s High-Risk Overhaul Creates Imbalance in Kentucky’s Tax System
House Bill 196, sponsored by Representative Bill Farmer, proposes to overhaul Kentucky’s tax system by eliminating income taxes on individuals and corporations while greatly expanding the sales tax base. The… -
ITEP Work in Action January 14, 2013 Kentucky Center for Economic Policy: Four Revenue Options that Should Be on the Table
The Kentucky legislature is debating ways to address the hole in the state’s Medicaid budget. The options under consideration include immediate across-the-board budget cuts as well as eventual cuts to… -
ITEP Work in Action January 14, 2013 Kentucky Center for Economic Policy: Extending Federal Tax Cuts Would Double the Deficit for the Benefit of the Wealthiest
Ten years ago, large federal tax cuts were signed into law by President Bush. Those cuts are now set to expire at the end of 2012. Extending them beyond that… -
ITEP Work in Action January 14, 2013 Kentucky Center for Economic Policy: 2011 Revenue Results a Reminder of Importance of State Income Taxes
The $166 million in state revenues above projections for the fiscal year that just ended are helping prevent additional cuts to critical state services. They are also a reminder of… -
ITEP Work in Action December 17, 2012 Kentucky Center for Economic Policy: Kentucky’s Income Tax: Protecting and Strengthening a Key to Growth
“The state individual income tax is essential to economic growth and quality of life in Kentucky and should be protected – even strengthened – as part of any tax reform…