Kentucky Sales Tax Modernization: Removing Business Inputs for a Competitive and Pro-Growth Tax System

• Kentucky has an opportunity to lead in removing business inputs from its sales tax base
• Taxing business inputs causes economic distortions and increases regressivity
• Kentucky has broadened its sales tax base to include many services, but there is still room for pro-growth reform
• Reforms should include broad exemptions for business inputs
• Narrowly defining business inputs is imprudent
• Expanding the sales tax to more business inputs would make the tax code worse
• Taxing final consumption is more pro-growth and efficient than taxing income
• Taxing business inputs is economically harmful as it taxes the factors of production in a concentrated manner.

Source: taxfoundation.org

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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