Does Kentucky Need a Consumption Based Tax System?
I hear that Governor Bevin is considering a proposal to a move away from an income tax based tax to a tax on goods and services, a so-called consumption tax.
The argument is that consumption based taxes would stimulate the economy and thus provide more revenue.
But will this work in Kentucky?
It is rare that you can see the affect of tax changes before you implement them. Kansas provides that information. In 2013, Kansas did away with income tax and raised sales tax rates and did not realize the promised growth. The state funding deficit exploded forcing deep cuts to education, healthcare and infrastructure.
Also, taxing groceries and medicines, disportionately affects those who can least afford it. People in low- and middle- income brackets will be forced to pay more of their income in taxes without offsetting income tax reductions
For these reasons, and many more, consumption based taxes are not what Kentucky needs.
What was bad for Kansas will be worse for Kentucky.
Paul Schwartz
Fort Thomas
Mr. Schwartz is “right on” in describing this as a regressive tax but the republicans love it for giving the upper income folks a real tax break at the expense of the middle and lower income citizens.
Well said, Paul. Any intelligent person looking into the history of Art Laffler, the author of Kansas’ economic disaster, will quickly learn the wisdom of your letter. Sales taxes are regressive and will actually stunt economic growth by raising the cost of buying everything on which the sales tax is imposed. It is a simple economic principle: As price goes up, consumption goes down. The reason for the rising cost is irrelevant to this principle.