The Kentucky House wasted no time last week in getting a major measure approved.
By the end of the week, legislators, mostly along party lines (Rep. Ashley Tackett Laftery crossed lines to vote for it) had voted in a measure to reduce the state’s income tax rate to 4 percent next year (it went down to 4.5 percent Jan. 1). The bill is part of the Republican majority’s plan to move the state’s economy to being based on consumption and not income.
Part of the result of this plan is that, on Jan. 1, many services which used to be provided tax-free in Kentucky are now required to pay the 6 percent sales tax.
The idea is that by reducing income tax rates as low as possible (the goal being zero), you can attract businesses and individuals to move into the state.
This idea has been debated for a long time. There does seem to be some evidence that those states which do have a consumption taxation base — for example, Florida and Tennessee — have successful economies, to an extent. However, whether that method of taxation is the reason or just a factor in something greater has never really been borne out through evidence.
However, I do agree with at least one part of the idea — one that strikes at a central tenet of the liberal Democratic Party platform.
Before moving on to the House for passage, the House Appropriations and Revenue Committee discussed the matter. Predictably, the committee’s Democrats commenced to hand-wringing about what the measure was going to cost. The Democrats invariably bemoaned the idea that taxes will have to be raised later to make up for the difference and, in order to maintain the operation of the government as it is will require more funding from somewhere.
However, I tend to think more in line with Committee Chair Rep. Jason Petrie, who answered back those criticisms of the measure with the statement that those ideas operate under the assumption that you’re not budgeting below your means.
Let me explain.
The interial impulse of governments is to grow bigger, that’s just what they do. Growth can be good, but it can also be a bad thing.
Bureaucracy begets bureaucracy, which begets bureaucracy, and so on. One agency has to be created to police another agency, new staffers are added to handle problems that wouldn’t exist but for the growing reach of the government. The government — with its guarantee of revenue through taxation — can eliminate private industry competition in certain areas by simply existing.
The mostly Democrat idea that we must fund government at the same level or better year after year assumes that there’s nothing that can be cut, or that every single government agency and employee is essential to the operation of the state or nation.
It assumes that there’s no room in our educational system for private industry. It assumes that only government can build and maintain roads and provide other services. It assumes that every regulation currently in place needs to not only exist but be implemented through the use of funding. It also works under the idea that anything done for profit cannot also be done for good.
All of these thought processes have combined over the years to increase not only the reach, but also the cost of government. That’s why the idea of reducing government funding is so uncomfortable. Also, government is addicted to taxation. When you attempt to tell it to cut back, it can’t fathom that and lashes out.
I don’t know if this action will ultimately make a better or stronger Kentucky. I do, however, agree with Petrie’s statements during the hearing that what was in place clearly wasn’t working. Decades of Democratic majority rule did not lead to a more prosperous or economically healthy Kentucky. I’m sorry, but the proof’s in the pudding.
A change has been needed. Whether this is the right one remains to be seen, but a change in and of itself is welcome. We just need to be ready for the potential impacts.
