- "Fairness: The tax system should treat people equitably. The Commission will review the tax burden that different taxpayers shoulder, from Kentucky families to Kentucky businesses, from small businesses to big businesses, and within different industry sectors in the state.
- Competitiveness: Any changes to the tax system should ensure that Kentucky continues to attract jobs and investment to the state, while keeping and protecting the jobs and businesses we already have. The Commission will review how Kentucky’s tax environment compares to other states and identify ways to improve business tax competitiveness.
- Simplicity and Compliance: A tax system should be easy to understand and follow. The Commission will make recommendations to ensure compliance with Kentucky’s tax system is simple for individuals and businesses and to ensure efficient administration by the state.
- Elasticity: The tax code should allow state revenue performance to mirror economic performance. While Kentucky’s code has performed relatively well during the recession, revenue growth has not kept pace with changes in the economy.
- Adequacy: The Commonwealth’s tax structure should generate sufficient funds to support critical state services. The Commission is charged with reviewing the adequacy of revenues from the current tax structure and making recommendations for improvement."
Based on rankings from the Tax Foundation, Kentucky doesn't seem to have any glaring problems. Based on Governor Bashear's State-of-the-Commonwealth address in January 2012, it seems that he is not only concerned about improvement for today, but for the future. In his address he stated:
"to prepare ourselves to compete in the future, we must, in a strategic and non-partisan way, re-align our system with the principles of fairness and with a 21st century economy. In the coming days, I will lay out a process to ensure this issue gets both the thoughtful attention it deserves and the public input needed to develop consensus. I guarantee three things:
One, all voices will be heard.
Two, we will consider all options.
And three, our focus will be on creating a system that meets Kentucky's future needs."
I think it will be interesting to see how the commission determines what the future looks like and how it impacts revenue streams. I think that should include review of the sales tax base to be sure it includes today's types of consumption (digital goods and personal services), reviews tax expenditures to determine if any are no longer needed, reconsiders the gas tax and its weakness as a tax per gallon when fuel efficiency is improving, and providing clear and simple guidance on new and emerging e-commerce activities including cloud computing.
What do you think?