(This article was published in the Lexington Herald-Leader on Monday, May 27, 2013)
By Brian Strow, Ph.D.
Jason Bailey, a member of the Governor’s Tax Reform Commission, argued that Kentucky needs to take “bold revenue action” to fund increased government spending. (Ky. Voices: Tax reform essential to Kentucky’s future, May 4).
Bailey is correct that Kentucky’s fiscal house is not in order. He is also correct that Kentucky’s tax code could stand to be improved with respect to both efficiency and fairness.
Unfortunately, Bailey’s policy prescription of higher taxes and more government spending will only make matters worse for the average Kentuckian.
According to the Federation of Tax Administrators, Kentucky ranked No. 13 in 2011 for tax burden as a percentage of personal income of any state government in the country. Of Kentucky’s neighboring states, only West Virginia ranked higher. Virginia, Tennessee and Missouri all ranked in the bottom 10 states for tax burden as a percentage of personal income.
If state taxes already are at the high end of the national average, why is Bailey suggesting that the state’s problem is a lack of revenue? In 2011, Kentucky ranked No. 9 for state government spending as a percentage of gross state product (GSP). Once again, the only neighboring state to rank higher was West Virginia. Illinois, Indiana, Tennessee and Virginia all ranked among the ten-lowest spending states. [Read more...]