The Richmond Register

Viewpoints

February 17, 2013

Wayne’s world crashes Kentucky taxpayers’ party

Recycling is for old batteries and used motor oil, not failed economic ideas that should have been tossed long ago.

President Obama’s State of the Union speech was filled with such big-government policy retreads that failed to jumpstart sluggish economies in the past, including a recycled attempt to force companies to pay higher wages for low-skilled workers.

Raising the minimum wage from the current $7.25 to $9 per hour – as Obama proposed – would do nothing to lower unemployment among Kentucky’s teens – more than a fourth of whom currently are unemployed with the jobless rates rising in recent months.

Instead, this recycled policy will only serve to deny teens access to that first bar of employment, and the experience it provides them to go higher.

“If you raise that first bar higher on the economic ladder, you make it harder for young people with fewer skills to grab ahold of that first rung – from which they can swing on up the ladder,” said Western Kentucky University economics professor Brian Strow. “Being able to grab ahold of that lower bar means getting a job where young people can gain valuable job skills and experience to help them climb.”

Other economic retreads that seep into the commonwealth’s political sewers from time to time include tax proposals exploiting the kind of class-warfare mentality all the rage in Washington nowadays.

The stench rose up again recently as Louisville Democratic Rep. Jim Wayne jauntily declared: he wants a “buoyant” tax system.

So what exactly does a “buoyant” tax policy look like?

It apparently means recognizing that, as Wayne scolded, “we have a tremendously unjust system” and need a bold and audacious attack on wealthy, successful Kentuckians.

“The top 5 percent income earners should be paying additional taxes,” Wayne said as he recycled the whole prosperous-Kentuckians-are-not-paying-their-fair-share shtick.

This might be considered “reform” in Wayne’s world, but, in reality, is nothing more than a defective retread that has shown up repeatedly in most of the 12 – yes, 12 – different tax studies ordered by Kentucky politicians since 1982.

This latest effort comes courtesy of the Governor’s Blue Ribbon Commission on Tax Reform, which recently issued the latest round of overplayed tax recommendations.

The nonpartisan Tax Foundation concludes the commission’s proposals would “raise income and excise taxes … and maintain a costly business property tax system with few changes.”

Wayne thinks that’s the right direction. So does his biggest enabler on the commission – Jason Bailey of the Berea-based Kentucky Center for Economic Policy.

In a missive (published in the Register on Nov. 26), Bailey cited a report by the Institute on Taxation and Economic Policy out of Washington, D.C. claiming Kentucky’s tax system is “upside down,” that wealthier Kentuckians’ incomes “have grown the most over the past couple of decades” and that “the wealthiest pay far less of their income in taxes.”

But Bailey ignores the report’s data on how much of the commonwealth’s tax burden already is carried by the wealthy.

According to the same report Bailey cites, individuals in the top 1 percent of Kentucky’s income earners already pay 55 times more in taxes than individuals in the bottom 20 percent.

He must have been out picking up aluminum cans the day his Econ 101 class learned that pro-growth policies are based on affordable tax rates.

Although tax rates already are very high on upper-income Kentuckians, Bailey proposes adding yet another even higher rate. Bailey-and-Wayne’s universe revolves around riding up and down the same weary roads of economic fallacies rather than promoting the hard work, innovation and wise investing needed to swing to the top.

“In their world, it’s only about fairness and not about economic growth,” Strow said. “It’s about how the pie is divided, not about growing the pie.”

Jim Waters is president of the Bluegrass Institute, Kentucky’s free-market think tank. Reach him at jwaters@freedomkentucky.com. Read previously published columns at www.freedomkentucky.org/bluegrassbeacon.

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