Private jet tax break hits turbulence, but it’s just small bump in broken system
Kentucky House Republicans got a nasty little surprise this week when they found out that even the most devoted of Ronald Reagan’s spiritual heirs understood that a tax break on private jets would be good for no one but the owners of private jets.
House Bill 447 flew into committee but landed with a jolt, when the chairman decided to have a discussion but not hold a vote on the matter. The optics were .... bad. Even Republicans realized it, especially after someone helpfully pointed out how quickly it followed a vote to cut unemployment benefits, you know, because of all those lazy workers. If you pose as a friend of working people but act directly against them while helping the uber-rich, then voters sometimes remember it. Plus, it was an obviously nonsensical argument. People who own private jets are not under a hardship to pay 1.5 cents on every hundred dollars of assessed value, and the absence of that tax would not suddenly bring them in droves from, say, Cincinnati to Kentucky.
A little hiccup, really. (And private jet owners shouldn’t worry, it will probably get tucked into the budget bill.) But much of Kentucky’s tax policy has been decided the way that sponsor Rep. Jonathan Dixon, R-Corydon, was hoping this would go — do a favor to some rich donor by giving them a tax break on one little thing, and suddenly that little thing is ensconced in our tax code where it never gets looked at again. It’s why in 2022 Kentucky will give away roughly $8.8 billion in “tax expenditures,” the loopholes, breaks and giveaways that were once just a favor to some industry or sector. In both 2010 and 2018, the Herald Leader explained all this thoroughly.
Once in the tax code, these breaks are never again examined to see if they even make sense. Millions in film credits, have they paid off? We have no idea. Gov. Matt Bevin came as close as anyone in addressing tax breaks, even ending the state film credit. But the General Assembly restored and even widened it the next year to $75 million a year. We still don’t know the economic impact. Bevin, by the way, added a few more breaks of his own.
Airplanes are the least of our tax problems. There are other bigger ones, such as penny ante, political upsmanship games between Gov. Andy Beshear and the General Assembly on vehicle tax relief and the governor’s one-year, one percent relief on the sales tax, a nice gesture, but one that won’t make much difference in the long run.
The biggest problem of all is what the GOP superdupermajority is considering — using our healthy, COVID relief-buttressed budget to phase out the income tax. This is what rich people want far more than airplane tax breaks. Because you usually have to make up income tax cuts by expanding sales tax, it’s regressive, meaning it hurts poor people more. Not to mention state services. Remember what happened in Kansas a few years back? In 2012, Gov. Sam Brownback made massive cuts to business and the top rate of individual income taxes, which he said would produce jobs. Just five years later, amid massive cuts to education and healthcare, the legislature reversed the cuts.
In Kentucky, income taxes make up 40 percent of revenue. In the old days, tax reform meant closing all the loopholes and expanding the sales tax to a broad array of services because that’s where the economy was growing fastest. Sadly neither party had the guts to take it on. Now it means giving more to rich people. As Kansas showed, supply side economics or “trickle down economics” don’t work, and Kentucky is too poor a state to be doing these kinds of experiments. The states that have no income taxes, like Tennessee or Florida, have many, many other things going for them, including major cities, major tourism and not coincidentally, major investments in higher education.
This is shouting in the wind to the descendants of Ronald Reagan who rule us. But as the private jet example shows, sometimes the Reaganesque desire to put the rich ahead of everyone else — which has resulted in the obscene gaps between rich and poor in this country —looks exactly like what it is. In Kentucky in 2018, the income of 1 percent of Kentuckians is 18.4 times greater than the average income of everyone else in the state, according to a new report by the Economic Policy Institute. Do those people really need more tax breaks?
Of course, it’s easier to pick on transgender kids than the hard work of making a more equitable tax code. But a supermajority could get it done, for everyone’s benefit.
This story was originally published February 18, 2022 at 12:03 PM.
