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Elected officials and business leaders in the Louisville metropolitan area have been busy in recent years implementing policies to create a more competitive and business-friendly environment. At a time when many neighboring cities are experiencing exorbitant housing prices and business costs, Greater Louisville is seizing this opportunity to promote our advantages in affordability, logistics and quality of life. The Kentucky Legislature has reduced the state’s personal income tax by 100 percent over the past year and is working diligently to meet revenue drivers to further reduce it in the coming years. Additionally, we invest in innovative programs like the Kentucky Product Development Initiative, which helps make our state more attractive for business investment.
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We are already seeing the results of these programs and other policies. Last year, Greater Louisville Inc. increased our pipeline of economic development projects by 93%, demonstrating the growing interest in businesses relocating and expanding to the region. But we can’t stop here. In addition to addressing long-term issues like workforce participation and public safety, we must finish what we started with tax reform by increasing opportunities for local investment through local tax structures.
Louisville has a unique economy that employs hundreds of thousands of people and welcomes millions more through tourism. Currently, much of the city’s funding comes from taxing workers through occupational taxes. If we could change our model of taxing consumption rather than production, we would not only have more money in the pockets of Louisvillians, but we would also have more ability to invest in local assets by capturing consumption-based income.
What can Louisville learn from other cities to improve its tax code?
Two years ago, GLI led a group of 120 companies to select leaders for the annual Greater Louisville Idea Development Expedition to Jacksonville, Florida. We spoke to some of Jacksonville’s top leaders. Much of their success was due to modern infrastructure and improvement projects funded by small incremental local taxes. From infrastructure investments to downtown revitalization, local funding for these large-scale projects and a competitive tax code have helped Jacksonville grow at an accelerated rate, with more than 100 people per day moving to the area. To do. One of the most important takeaways we took away from that trip was that Louisville and all Kentucky cities are better able to generate revenue streams to fund projects and support community needs. This meant that a flexible approach was needed.
Will tax reform help Louisville?Submit a letter to the editor here.
Currently, the Kentucky Constitution limits the Legislature’s ability to update revenue-raising options at the county and city level. Occupational taxes remain the main source of revenue for the Louisville metropolitan area. While the passage of state tax reform in 2022 emphasizes a shift from production-based to consumption-based taxes, local governments have not received the same benefits.
GLI has long prioritized local tax reform. But there has never been a more important time to do that. If he’s serious about turning Louisville and all of Kentucky into an economic powerhouse, he can’t afford to spend another year or two on local tax reform. Companies are keen to invest in the region, so now is the time to create a competitive tax structure.
A few weeks ago, Representative Jonathan Dixon introduced Kentucky House Bill 14. The bill would set up a voter referendum in November and, if approved by a majority of Kentuckians, would amend Section 181 of the state constitution, allowing the General Assembly to create parameters for the state constitution. A county, city, town, or municipality can review and amend its tax structure. We strongly encourage the General Assembly to pass this bill and give Kentuckians the freedom and tools they need to create new local investment opportunities.
Condrad Daniels is President of HJI Supply Chain Solutions and Chairman of the Greater Louisville Inc. Board of Directors. Sarah Davasher-Wisdom is president and CEO of Greater Louisville Inc.
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