State Senate President David Williams wants an independent commission to study Kentucky's tax code with an eye toward making our tax structure less reliant on production and more reliant on consumption.
Changes proposed by the commission would be submitted to the 2012 General Assembly. Under Williams' scenario, lawmakers would be limited to voting up or down on the reform package. No amendments would be allowed.
Sounds good, particularly the up-and-down vote with no amendments. In reality, though, the rest of Williams' proposal is a perfect example of a politician creating the illusion of doing something while actually doing nothing — nothing new at least.
When it comes to evaluating the tax code's potential for raising revenue from consumption, Kentucky's been there, done that more than once. Plowing this ground again won't turn up any answers that can't already be found in reports gathering dust somewhere in the bowels of the Capitol or Capitol Annex.
For instance, a task force appointed by former Gov. Brereton Jones concluded an extensive study of the tax code in late 1995.
While the panel didn't propose anything quite so sweeping, its work showed us that, if Kentucky eliminated all exemptions to the sales tax (including food, medicine and all services), it could reduce the sales tax rate to as low as 3 percent, cut or eliminate a variety of other taxes and improve both the state's bottom line and the plight of lower-income Kentuckians.
In 2002, William Fox, a consultant hired by a special legislative subcommittee, revisited the same territory.
Anyone reading his report today might think Fox is the second coming of Nostradamus because he told us where the state would be in 2010 if it didn't address the lack of elasticity in its tax base by expanding the sales tax to include the growing service sector of the economy. And brother, are we ever there — coping with the huge structural deficits in the state budget he predicted, and cutting back on the delivery of essential services.
We're there because our lawmakers by and large have ignored the work of Fox, the Jones-appointed task force and other studies of Kentucky's tax structure.
Oh, they've nibbled on a bit of the low-hanging fruit of tax reform over the years. But whenever anyone proposes something substantive, whether it be the Republican version Rep. Bill Farmer introduces annually or the Democratic option Rep. Jim Wayne tosses in the hopper with equal regularity, the vast majority of legislators dive for cover under their desks — often as not finding their respective leadership already resting comfortably there.
Kentucky doesn't need another study of tax reform. It needs legislators with the fortitude to put the answers found by past studies into effect. It needs legislators who are willing to actually do something, rather than settle for creating the illusion of doing something for political effect during a gubernatorial campaign.