Helping the rich, hurting the poor: GOP tax plan will be a disaster for Kentucky.

Kentucky’s state legislature is about to cut taxes for millionaires while raising costs for poor and middle-class Kentucky families.

Kentucky House Republicans recently voted to fundamentally alter the state’s tax code by eliminating the state income tax and shifting the burden of public funding to expanded sales taxes. The bill now awaits a vote by the Senate, where it looks likely to pass as well.

If it seems too good to be true—it probably is.

On its face, the bill’s promise to gradually phase out the state’s 5% income tax may seem like a fine idea. No one likes seeing a chunk taken out of their paycheck, and paying a few cents more per dollar in sales taxes on various items doesn’t seem like much.

But sales taxes add up, and for many Kentuckians this change is going to lead to less money in their wallets and higher tax bills at the end of the year. This is especially true for those who can least afford to pay more, as sales and consumption taxes are extremely regressive.

The rich get richer and the poor get poorer.

On the other side, the highest earning Kentuckians can look forward to a significant tax break if this bill is passed into law. By one estimate, the initial cut to a 4% income tax in 2023 would give Kentucky millionaires a tax cut of $11,056 dollars, and a full elimination of the income tax would hand over $55,259 dollars a year to the wealthiest individuals in the state.

To make matters worse, the proposed consumption tax increases would likely leave significant revenue gaps and, as a result, legislators may be forced to make massive cuts to education, Medicaid, and the criminal justice system—or raise sales taxes even higher. These too would disproportionately hurt everyday Kentuckians, while barely affecting the rich.

It hasn’t worked before, so why would it work now?

This isn’t idle speculation - we have a model for exactly how this tax experiment will end up. Back in 2012, Kansas Republicans drastically cut their own state income taxes with a goal of creating jobs and boosting businesses. But what actually ended up happening was that the state experienced lower job growth compared to neighboring states, while also facing disastrous cuts to education budgets and other services. In the end, things got so bad that the entire policy was repealed in 2018.

Kentucky cannot afford to repeat Kansas’ mistakes. One in 5.5 Kentuckians currently lives in poverty and Kentucky has the 4th highest poverty rate in the country. The lawmakers pushing this bill are selling the people of Kentucky a vision of consequence-free tax cuts, but that’s not how the world works.

Taxes are necessary to live in a functional society, and if you eliminate the state income tax, that money has to come from somewhere. Our schools, roads, health systems, and human services have to be paid for. In the nine states without income taxes, that money overwhelmingly comes from more regressive taxes and fees that disproportionately hurt poor and middle-class families. Let’s not be the tenth.

An insult to working families in Kentucky.

In the wake of the COVID-19 pandemic and climate disasters pushing Kentucky to the breaking point, the last thing we need now is to pass the burden of recovery onto the working folks who are still economically recovering. The only group that has emerged from the last two years better off than before is millionaires and billionaires, and it’s absurd to suggest that we enact tax reforms that would shift the state’s tax burden away from them and even more onto the poor and middle class.

We cannot allow this ineffective and cruel tax cut that only benefits the wealthiest among us to pass. It’s simply bad math that throws the responsibility of balancing the book on the most vulnerable in the state.

Long-term economic success for all comes from the bottom up. It’s time we reject the false notion that a small number of wealthy elites should for some reason pay a lower percentage of their income than people who work for a living and start asking rich Kentuckians to pay their fair share.

Ariana Velasquez is from Pikeville, KY. She is a University of Louisville Political Science alumni class of 2021, and a class of 2023 MBA candidate and class of 2024 Juris Doctorate candidate at the University of Kentucky. Morris Pearl is the Chair of the Patriotic Millionaires, a former managing director at BlackRock, Inc., and the author of Tax the Rich! How Lies, Loopholes, and Lobbyists Make the Rich Even Richer.