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June 2012
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Beshear's tax proposal disappointing


On his 2,248th day as Kentucky's governor, Steve Beshear finally issued a tax reform proposal. It was not worth the wait.

Beshear's plan makes minor reductions in corporate and individual income tax rates and extends the 6 percent sales tax to a hodge-podge of services. He could have, and should have, been bolder on both fronts.

But it really doesn't matter. Neither Beshear's plan nor any other is going to pass this legislative session. The governor failed to lay the necessary foundation, and both parties are fixated on this fall's battle for control of the House of Representatives.

Republicans will, unfortunately, resist any reform, however reasonable, that raises any new revenue. Democratic Speaker of the House Greg Stumbo, the staunchest defender of Kentucky's stagnant status quo, is happy to let the state suffer rather than subject his vulnerable members to a tough vote this year.

At least Beshear started the ball rolling. Having waited so long, however, it is a shame he did not try to do something more dramatic.

If legislators are going to risk their political futures to support something that can be characterized as a tax increase, they are more likely to do so for a plan that would make a real difference. Beshear wants them to gamble their careers to pass a timid bill. Kentucky should move toward, if not beyond, Tennessee's model. Its individual income tax applies only on interest from bonds and notes and dividends from stock. Instead, the Volunteer State relies on relatively high sales and use tax rates that, like Beshear's plan, apply to some services.

Beshear's recent budget proposal also revealed another stark contrast with Tennessee involving community and technical colleges. He proposed $145.5 in bonds to help the Kentucky Community and Technical College System pay for new projects. To service the debt, the 92,000 students in the community and technical college system would pay a new fee reaching $8 per credit hour, per semester next year.

Tennessee Gov. Bill Haslam, a Republican, is proposing two free years of community college and technical school for in-state students. Haslam would pay the $34 million cost primarily from state lottery surplus. "We are committed to making a clear statement to families that education beyond high school is a priority in the state of Tennessee," Haslam said.

If Beshear was not a lame duck he might be rethinking his role as Obamacare's biggest gubernatorial booster. The governor has been basking in national publicity, but the nonpartisan Congressional Budget Office exposed new flaws in his beloved bad law.

The dysfunctional website and President Obama's outright lie of "if you like your plan you can keep it" were disasters, but the recent CBO report and statements by its director ought to doom the misbegotten monstrosity. Democrats and their media allies are spinning madly in a desperate effort to dodge the inevitable electoral fallout.

The CBO says Obamacare "will reduce the total number of hours worked" by numbers that represent "a decline in the number of full-time equivalent workers of about 2.0 million in 2017, rising to about 2.5 million in 2024." The agency adds that the increase in American job growth over the period "will be smaller than it would have been in the absence of" Obamacare.

Despite liberal caterwauling about deceptive headlines and Republican misrepresentations, CBO Director Doug Elmendorf told Congress that Obamacare "will reduce the total number of hours worked in the economy by between 1.5 and 2 percent." The budget bureaucrat added, "By providing heavily subsidized health insurance to people with very low income, and then withdrawing those subsidies as income rises, the Act creates a disincentive for people to work."

The White House tried to say that it was a good thing that recipients of subsidized health care could now quit work or cut hours. An unintentionally hilarious New York Times editorial claimed this undesirable impact of Obamacare "will have a liberating impact for millions."

The CBO also estimated Obamacare's 10-year cost at over $2 trillion, or more than its backers said when pushing the law. And Obamacare will also do less than promised, the CBO said, by leaving 31 million people uninsured.

Jeffrey H. Anderson of the Weekly Standard summarized these developments in devastating fashion. "In 2009, we were told it would cost $848 billion to insure 31 million people. That's $27,000 per newly insured person. Now we're told it will cost $2.004 trillion to insure 25 million people. That's $80,000 per newly insured person - about a three-fold increase since passage."

It was a bad week for Beshear. But, on the bright side, he announced that he was taking yet another taxpayer-funded trade junket, this time to England.

John David Dyche is a Louisville attorney and a political commentator for WDRB.com.

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