3. Predicting How Kentucky's Sales Tax Change Will Affect Revenue

William Bennett Western Kentucky University
Faculty Sponsor(s): David Zimmer Western Kentucky University
In the summer of 2018, under pressure to raise more revenue, Kentucky changed its tax code. Becoming effective on June 1st, 2018, Kentucky's new law now has its sales tax being applied to certain services. To see how this change will affect revenue, data from other states that have also changed their sales tax regarding services was collected and analyzed. In order to appropriately compare services between states, the services were translated into their North American Industry Classification System (NAICS) equivalent. With the services somewhat standardized, the change in the volume of sales of each service from pre-tax change to post-tax change can be calculated, as well as its elasticity of revenue. Unfortunately, due to the low number of times that a state has changed its taxation of services in recent years, the sample size is small and the conclusions are not strong. Overall, this method of predicting revenue changes in response to sales tax alterations is probably not the best but may be viable for other forms of elasticity analysis.
Business & Economics
Poster Presentation

When & Where

Irwin Library 3rd Floor