#41 Kentucky

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The overall freedom ranking is a combination of personal and economic freedoms.

From 2012

State Facts

Net Migration Rate (?) 1.9 % 
Personal Income Growth (?) 1.35 %
How does the freedom ranking relate to these?


Like its neighbor West Virginia, Kentucky has been one of the more regulated states in the country on both the economic and personal freedom dimensions. Unlike West Virginia, however, Kentucky so far shows little sign of improvement.

Although local taxes are low in Kentucky (2.9 percent of income), state taxes are high (5.9 percent). That means the state is very fiscally centralized. Government debt is also extremely high, at about 27.0 percent of personal income. Government employment is slightly higher than average, and subsidies are slightly lower than average.

Land-use freedom is ample in Kentucky, although eminent domain for private gain remains mostly unreformed. The state lacks either a minimum wage or a right-to-work law. The state has done more than most other low-income states to maintain reasonable standards for lawsuits, although punitive damages have not been reformed. Insurance and occupational freedoms are mediocre, and the state has a hospital CON law. Nurse practitioners’ limited freedom of independent practice was revoked in 2011–12. However, a court did strike down the state’s anti- competitive regulations on moving companies in 2013–14. Some telecom deregulation has taken place, but there is still local cable franchising. Health insurance mandated coverages grew tremendously in the years to 2010, but it remains to be seen what effect they will have on the small-group market going forward.

As of the end of 2014, Kentucky still had a super-DOMA in force, and so the Obergefell decision should increase the state’s personal freedom substantially (see Appendix Table B17). Incarceration rates and victimless crime arrest rates have gone in opposite directions: the former, already very high, have risen further, even as the latter have fallen. Drug arrests are still a bit above average, but nowhere near the heights of 2006–8, when arrests amounted to about 15 percent of the monthly reported drug-using population. Law enforcement uses the Department of Justice’s forfeiture revenues from equitable sharing with abandon—more than one standard deviation above the national mean. Tobacco freedoms and gun rights seem quite secure, however. Educational and alcohol freedom scores are mediocre, while cannabis and gambling freedoms are extremely limited. With alcohol, the state has local blue laws, very high beer and wine taxes, a total ban on direct wine shipment, and no wine or spirits in grocery stores. With education, there are no private school choice programs, and the state recently expanded mandatory schooling to 12 years. Kentucky also looks to be one of the lowest states on travel freedom, though that is a small part of the index.

Policy Recommendations

  • Fiscal:To reduce debt, tighten the rules for municipal bond issuance and cut spending, particularly on grants to local school districts, employee compensation (repeal the prevailing wage law), and retirement.
  • Regulatory: Enact a right-to-work law, preferably one of the kind discussed in the “Labor-Market Freedom” section of this book, which does not violate freedom of association.
  • Personal: Reform sentencing for nonviolent offenders with an eye toward reducing the incarceration rate to the national average. In 2014, this change would have raised Kentucky from 50th to 45th on personal freedom.
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