Tax reform will help Louisville create opportunities for investment
by Moneyofficeteam 23 March 2024 · Investment
Greater Louisville’s elected officials and business leaders have been busy in recent years implementing policies to create a more competitive and business-friendly environment. As many of our peer cities are seeing exorbitant housing prices and costs of doing business, Greater Louisville is seizing this opportunity to market our advantages in affordability, logistics and quality of life. Over the past year, the Kentucky General Assembly lowered the state’s personal income tax by a full percent and is working diligently to meet revenue triggers to further reduce it in the coming years. Plus, they have invested in innovative programs like the Kentucky Product Development Initiative, that are helping to make our state more attractive to corporate investment.
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We are already seeing the pay-off from these programs and other policies. Last year, Greater Louisville Inc. grew our economic development project pipeline by 93%, showing there is rising interest in businesses relocating and expanding to our region. But we cannot stop here. In addition to addressing long-term issues like workforce participation and public safety, we have to finish what we started with tax reform by creating more opportunities for community investment through local tax structures.
Louisville has a unique economy that employs hundreds of thousands of people and welcomes millions more through tourism. Right now, much of the city’s funding comes from taxation on our workers through an occupational tax. If we can change the model—taxing consumption rather than production—not only will we keep more money in Louisvillians pockets, we will also increase our ability to invest in community assets by capturing consumption-based revenue.
What can Louisville learn from other cities to improve tax law?
Two years ago, GLI took a group of 120 business and elected leaders to Jacksonville, Florida for our annual Greater Louisville Idea Development Expedition. We heard from Jacksonville’s top leaders who attributed much of their success to updated infrastructure and improvement projects funded by small and incremental local taxes. From infrastructure investments to downtown revitalization, local funding for these large-scale projects and a competitive tax code has helped Jacksonville grow at an accelerated rate with more than 100 people moving to the region per day. One of our top takeaways from that trip was that Louisville, and all of Kentucky’s cities, needs more flexibility in creating revenue streams to fund projects and support the needs of their communities.
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Right now, Kentucky’s Constitution limits the General Assembly from being able to update revenue-raising options at the county and municipal level. Occupational taxes remain the primary revenue generator in Greater Louisville. While the passage of state tax reform in 2022 emphasizes a move from production-based taxes to consumption-based taxes, our local governments are not reaping the same benefits.
GLI has prioritized local tax reform for many years. However, there has never been a more important time to make it a reality. If we are serious about making Louisville and all of Kentucky an economic powerhouse, we cannot afford to kick the can on local tax reform another year or two. Businesses are eager to invest in our region, so the time for building a competitive taxing structure is now.
A few weeks ago, Rep. Jonathan Dixon filed Kentucky House Bill 14, which will set up a voter referendum in November, and if approved by the majority of Kentuckians will amend Section 181 of the State Constitution to allow the General Assembly to create parameters in which a county, city, town or municipality could review and revise taxing structures. We strongly encourage the General Assembly to pass this measure and give Kentuckians the freedom and tools needed to create new local opportunities for investment.
Condrad Daniels is the president of HJI Supply Chain Solutions and Chair of the Greater Louisville Inc. Board of Directors. Sarah Davasher-Wisdom is president and CEO of Greater Louisville Inc.
