Lexington Herald Leader Editorial Accuses The House Of "Playing That Old Budget Shell Game". I Can't Say I Disagree.
Playing that old budget shell game
State needs real tax reform
Numbers are hard things.
Even the most skilled and determined politicians can't make two plus two come out to anything but four.
As a result, House Speaker Greg Stumbo, D-Prestonsburg, had to resort to logic that defied the highest arts of pretzel-making to explain how the House plans to avoid cuts in higher education without increasing any taxes despite a $1.5 billion hole in the budget for the coming biennium.
Stumbo is invoking the magic of closing loopholes to do this but there seems to be little political will to close any loophole that has an advocate breathing down the legislative throat. Which is every loophole. (No surprise, given that loopholes come into existence because someone wants them. Of course, the net effect of opening a loophole for one interest is to raise taxes or reduce services for those who don't get that tax break.)
One of the suggestions on the table, for example, is doing away with a law that eliminates the room tax for visitors who stay in hotels or motels for more than 30 days. But two large corporate citizens — UPS and Delta — reserve rooms for large blocks of time and have "some concerns about that," Stumbo said. And the best guess is that eliminating the exemption would only add $6.6 million to the state coffers in the next two years.
Another idea is to suspend for two years a provision that lets businesses carry losses forward for 20 years for tax purposes. Stumbo argues that's not a tax increase since the plan would be to add two years on to the end, making the businesses economically whole, eventually. The state chamber argues, with reason, that a business that pays more tax in the next biennium will feel real pain now just as they're slogging through the aftershocks of a recession.
There's not been much discussion about any of the really big loopholes that will allow an estimated $6.9 billion to slip through the revenue sieve this year. In one way that's understandable because the legislature really doesn't know much about those tax breaks. There's very little information about what they accomplish. Some may be justified by the economic activity they encourage but no one collects and analyzes that information so legislators would just be shooting in the dark.
And so it goes. Kentucky needs real tax reform and an unblinking examination of tax breaks. Instead we're getting a shell game intended to deceive us into believing that $1.5 billion can be found somewhere, somehow without raising taxes or endangering our future by cutting funds for education and other essential services.
State needs real tax reform
Numbers are hard things.
Even the most skilled and determined politicians can't make two plus two come out to anything but four.
As a result, House Speaker Greg Stumbo, D-Prestonsburg, had to resort to logic that defied the highest arts of pretzel-making to explain how the House plans to avoid cuts in higher education without increasing any taxes despite a $1.5 billion hole in the budget for the coming biennium.
Stumbo is invoking the magic of closing loopholes to do this but there seems to be little political will to close any loophole that has an advocate breathing down the legislative throat. Which is every loophole. (No surprise, given that loopholes come into existence because someone wants them. Of course, the net effect of opening a loophole for one interest is to raise taxes or reduce services for those who don't get that tax break.)
One of the suggestions on the table, for example, is doing away with a law that eliminates the room tax for visitors who stay in hotels or motels for more than 30 days. But two large corporate citizens — UPS and Delta — reserve rooms for large blocks of time and have "some concerns about that," Stumbo said. And the best guess is that eliminating the exemption would only add $6.6 million to the state coffers in the next two years.
Another idea is to suspend for two years a provision that lets businesses carry losses forward for 20 years for tax purposes. Stumbo argues that's not a tax increase since the plan would be to add two years on to the end, making the businesses economically whole, eventually. The state chamber argues, with reason, that a business that pays more tax in the next biennium will feel real pain now just as they're slogging through the aftershocks of a recession.
There's not been much discussion about any of the really big loopholes that will allow an estimated $6.9 billion to slip through the revenue sieve this year. In one way that's understandable because the legislature really doesn't know much about those tax breaks. There's very little information about what they accomplish. Some may be justified by the economic activity they encourage but no one collects and analyzes that information so legislators would just be shooting in the dark.
And so it goes. Kentucky needs real tax reform and an unblinking examination of tax breaks. Instead we're getting a shell game intended to deceive us into believing that $1.5 billion can be found somewhere, somehow without raising taxes or endangering our future by cutting funds for education and other essential services.
Labels: News reporting
posted by KYJurisDoctor at 9:08 AM
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