Tax reform that gradually eliminates income tax can lift all Kentuckians

Being visionary means being able to plan for the future with imagination and wisdom.

The imagination part is easy; the wisdom part takes work. It isn’t enough to simply see what you want or what’s best for the whole. Learning how to turn what you see into reality and make it last takes humility and dedication. Resilience. Patience. Oftentimes, bravery.

Kentuckians have waited patiently for years for a comprehensive solution to some of our most daunting challenges — how to fund pensions, which have been a historic burden on our system; how to support our educators and law enforcement officers; and how to improve our near-bottom health and educational rankings.

I am thrilled my friends in the Kentucky House have finally presented a solution. Not only did they take advantage of state surplus funds and unprecedented federal stimulus gifts to propose a progressive budget — one that makes record investments in education and infrastructure, fully funds pensions and pre-K, and provides much-needed support to law enforcement — they took the necessary, brave step in passing tax legislation that protects these investments for the future.

They understood we can’t just make promises to our people — our teachers, our first responders, our youth — with no plan for how to keep them.

Tax reform is needed now. There is not a more crucial or opportune time, while equipped with a healthy surplus of funds, to create a system that allows Kentucky to grow while breaking the cycle of dependency. Solving our multi-generational problems takes holistic and bold solutions like phasing out the personal income tax (passed Friday as House Bill 8) and giving communities more tax options to generate local revenue (House Bills 475 and 476 would do this through a constitutional amendment). The next vital step will be to eliminate the corporate income tax, and I hope our leaders soon take it.

It would be even better if we phased out the income tax, while also eliminating incentives as an economic development recruitment tool and instead investing in programs that promote our beautiful state. That would signal to the rest of the world that Kentucky is open for business. This makes Kentucky a more attractive place to live and work and puts money back in the pockets of individuals and consumers. I trust that extra $2,000 to $3,000 in the hands of Kentucky families. Not the government.

To those who see this as a regressive approach, I say look at the numbers. Right now fewer than 50 percent of Kentuckians make enough money to pay income tax. These residents, as well as our corporations, carry the burden of funding our budget. Meanwhile, Kentucky remains the fourth most federally dependent state in the U.S. and businesses look elsewhere for more attractive options.

Replacing the income tax with a stronger sales tax makes the system fair. Everyone pays. And we start learning how to make smart purchasing decisions for the things we can afford while continuing to receive essential goods like groceries and medicine tax-free. Maybe we’re incentivized to work more, and harder, which only benefits our economy by filling jobs — something our employers are desperate to do. Kentucky’s workforce participation rate is a dismal 56.8 percent, ranking 48th in the nation.

As a mayor, I seek a vision for Kentucky that would give me more tools to build a stronger future for my residents. The ultimate benefit of tax reform for us is that we have more local control, that we have the tools we need to continue the unprecedented growth Somerset has seen in the last three years. Because we’ve put quality of life first and invested in initiatives that make Somerset a better place to live, we’ve seen record business commitment and record tax revenue without raising rates. Imagine what we could do if our residents and businesses had more money in their pockets and felt empowered to control their own destiny.

I applaud members of the House for taking this leap of faith. I hope my friends in the Senate will do the same. Kentucky has long been plagued with the perception that its people are poor and uneducated, unhealthy and dependent on social programs. And we will continue to be viewed that way if we don’t do what’s necessary to change the narrative.

We are the Run for the Roses. Master distillers of world-class bourbon. Builders of the Corvette, the Camry and the Ford truck. Home to global corporations like UPS and Amazon. This is my Kentucky. But it can be so much more if we are brave enough to reform our tax system — if we can find wisdom beyond imagination.

Let’s be bold and lean into policies that allow for long-term growth. It’s the best way to ensure we are planning not only for the days ahead but with a vision for decades.

Alan Keck is the mayor of Somerset.

This story was originally published March 10, 2022 at 11:10 AM.