Editorials

Tax reform plan needs work

We have to give Senate President David Williams credit: His bill creating the Kentucky Council on Revenue Reform would do a great deal more than just churn out another doorstop of a report on tax reform.

The council created by Senate Bill 1 would produce a specific plan for overhauling the state's local and state tax laws. The plan would be put into the form of a bill that the 2012 legislature would have to vote up or down, no amendments allowed.

The beauty of this approach is that it provides lawmakers with political cover to cast a difficult, but urgently needed, vote. Changes in the tax code inevitably produce winners and losers. The ban on amendments would protect the state's new revenue base from being carved into another honeycomb of tax breaks and exemptions.

The problem with this approach is that, faced with a challenge, elected leaders should summon political courage, not seek political cover.

As a practical matter, a plan devised by unelected experts will have a hard time achieving enough buy-in from elected legislators to become law. The council proposed by Williams brings to mind one of those "a priest, a minister and a rabbi go into a bar" jokes. Except it would be five economists, two accountants, a tax assessor and a lawyer going into a conference room to do elected legislators' work.

Only two members of the General Assembly, the chairs of the House and Senate budget committees, would be on the council, and they would have no vote. The other non-voting members would be the state revenue commissioner and the deputy director of financial analysis in the Governor's Office for Economic Analysis.

SB 1 also lists seven groups that would be consulted for advice on rewriting tax laws: the Kentucky Association of Counties, the Kentucky Association of Manufacturers, the state Chamber of Commerce, the Kentucky Farm Bureau, the Kentucky League of Cities, the Kentucky Retail Federation and the National Federation of Independent Business.

Anyone just glancing at this list will detect a distinct pro-business tilt.

The bill does not preclude the council from seeking advice from other quarters, but by naming some interest groups while excluding others — such as educators, public employees, economic development professionals, advocates for children and the poor — the bill immediately arouses suspicions and undermines the kind of broad support that tax reform will require.

It also makes it easy for Democratic leaders in the House to dismiss it, as Speaker Greg Stumbo did, as having no chance.

We realize this session is complicated by Republican Williams' run for governor. Also, an enlightened discussion of tax policy is a lot to ask for in a gubernatorial election year when candidates are usually falling over themselves promising not to raise any tax on anyone ever.

But the fundamental idea behind SB 1 is sound and urgently needed: Create a structure and process for bringing tax reform legislation to a vote in 2012.

If there's any way Williams, Stumbo and the rest of the legislature can make that happen, they'll be doing Kentucky a great service.

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