Rep. Bill Farmer (R-Lexington) announced his plan to repeal the state income tax and replace it by eliminating sales tax exclusions and expanding the sales tax to include services. Farmer spoke today as a guest on the Leland Conway Show.
A new 50-state report suggests one way Kentucky's economy could really benefit: by attracting more entrepreneurs. The Information Technology & Innovation Foundation found Kentucky is the 4th fastest-growing state in the category of entrepreneurial activity. Freeing income from taxation could incentivize more activity in an area which Kentucky shows some life.
The study, which purports to rank states according to their ability to transition to a technology-based economy. Overall, Kentucky ranks 45th in 2008, down from 39th in 1999.
Wednesday, November 19, 2008
Why Kentucky might do well to axe income tax
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4 comments:
The legalese of the bill is hard for me to wade through.
Is it right that rent on apartments and office space will be included in the excise tax?
Has that been done before in another state? I'm betting that will be seen as "regressive" on the poor renters.
What exclusions from the sales tax will be eliminated?
I 100% support eliminating the income tax. And the climate might just be right for a lot of local support, if the message gets out correctly.
Anyone that can figure out more details, please post it here.
The Kentucky sales tax is a flat tax and is inherently unfair. The sale of race horses is excluded from the state sales tax.
A far better tax would be a proportional tax on the movement of all moneys. Thus, when banks bundled and sold mortgages, banks would pay a proportional tax based on the value of the mortgages. Too, when race horses are sold, there'd be a proportional tax on those sales.
Laundered drug money would also be subject to such a proportional tax. The idea of a proportional tax on the movement of money comes from one of our founding fathers, Alexander Hamilton. In Federalist Paper 12, he wrote:
"The ability of a country to pay taxes must always be proportioned, in a great degree, to the quantity of money in circulation, and to the celerity with which it circulates. Commerce, contributing to both these objects, must of necessity render the payment of taxes easier, and facilitate the requisite supplies to the treasury."
I'm sure Rep. Bill Farmer (R-Lexington) would back off that real quick. Proportional has to do with fairness. Fairness is the last thing a Republican wants in taxation.
Does this tax the sale of a personal residence? Seems like that'd be a good loophole to close. What's different from buying a house and buying a car?
This is an easy one for me. I support Rep. Farmer's plan because of the economic growth opportunities it gives small business. This will also attract more jobs especially technology based jobs which is the one sector of our economy that is still growing.
In response to Hempy; Hamilton is right. When the wealthy in this state consume more than the poor, they will pay more in service and sales taxes. This is only possible with a consumption tax not an income tax.
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