Politics
6:56 am
Tue February 11, 2014

Gov. Steve Beshear's Tax Plan Fails to Address Inequality, Economic Think Tank Says

Steve Beshear
Credit Rae Hodge/Kentucky Public Radio

Kentucky Gov. Steve Beshear’s tax reform plan fails to address issues of fairness in the state’s tax code, says a non-partisan economic think tank.

The Institute on Taxation and Economic Policy doesn’t think the plan’s Earned Income Tax Credit will be enough to offset the new sales taxes for the less wealthy.

The institute says Beshear’s plan, which would raise $210 million in additional revenues each year, does not address what it calls the “regressive nature” of Kentucky’s tax code, whereby the wealthy are taxed less than low- and middle-income individuals.

“At the lowest end of the income spectrum, you may be spending, you know, you’re spending a much greater share of your income on those items that are subject to the sales tax," said Meg Wiehe, the institute's state tax policy director. "At the top end, more of your income is going toward savings and investment.

By expanding new taxes on existing services, people and families who make less money will wind up paying a larger share of their income versus their wealthy counterparts, Wiehe argues.

“The revenue raising, then, is coming from taxes that are regressive, that fall more heavily on low- and moderate-income families. And those changes, combined with the, I guess I should say EITC, was not enough to fully offset the impact of those regressive tax changes.”

The House Appropriations and Revenue Committee will take up Beshear’s plan Tuesday.