Proposed Tax is Nonsensical

Mar 11, 2022

Inflation is raging in Kentucky.

One example: A gallon of gas has gone from $3.21 in February to $4.04 in March.

So, making every dollar count is especially important these days. That is why a proposed sales tax on personal financial planning and personal investment management services coming out of Frankfort, HB 8, makes no sense.

Taxes on businesses tend to get passed on to the consumer. In this case, a heavy burden would hit workers on the cusp of retirement, and those who have recently retired after a lifetime of hard work. People rely on professional financial guidance especially during the time immediately preceding and directly following retirement.

Given the choice between financial help and necessities such as gas, bread and prescriptions for a budget-conscious, middle-income Kentuckian, necessities win out easily. That will leave them on their own to manage their retirement savings.

These are workers with $75,000 in life insurance coverage, the median amount of death benefit protection for U.S. households. These are retirees with $70,000 in income or less, among others. In this volatile economy, they need more help than ever.

And the data is clear – Kentuckians need more financial education and information. Financial literacy in Kentucky is below the national average, Northern Kentucky University research shows.

That’s what makes the proposed tax nonsensical.

What also does not make sense is harming Kentucky’s most vulnerable residents – special needs children.

Ensuring that these children are cared for after their parents’ death often requires the use of a special needs trust, and a financial planner to manage that trust. The proposed tax reduces the resources for their care by imposing a tax not only when the trust is established, but every year thereafter when the advisor reviews the trust’s financial plan. 

A better bill would be one that promotes financial education and guidance – one that would help make sure older workers and retirees can retain their dignity and independence throughout their entire lives.

Laura Leigh Latta

Laura Leigh Latta is Regional Vice President, State Relations at the American Council of Life Insurers (ACLI). She is responsible for state legislative and regulatory affairs in Alaska, Kentucky, Louisiana, Mississippi, Tennessee, and West Virginia. Laura Leigh leads ACLI’s advocacy team on issues related to tax, unclaimed property, and state guaranty associations.