The "Tax-Loophole" Game

The Kentucky Legislature is about to attack the state again, something that happens every year now, though the off-year ones such as the one in 2009 are small potatoes compared to the biggies that occur in election years, with the biennial budget being the main order of business. Perhaps a good point of reference concerning the money could be found in the Lexington Herald-Leader of 03 January, in which the tax loopholes designed by lobbyists and their legislative hacks were featured – a distinct public service.

As a good “for instance,” consider the H-L’s remarking of the fact that some $500 million dollars worth of thoroughbreds were bought in 2009, with no taxes being paid on the purchases. At six percent, the sales-tax amount the average citizen pays on purchases, the buyers would have enriched the state by $30 million but got off without contributing a dime. So...when a Saudi prince or other wealthy financer of jihad terrorists buys a Kentucky horse, he is allowed to keep millions to fund the deaths of Americans. Disgusting!

Also disgusting is the fact that these “horsy” folks claim their little horse-racing racket will dry up and blow away if they aren’t allowed to install one-arm bandits at the racetracks in order not to have to get their enterprise in order on their own, as other businesspeople are forced to do or go bankrupt. Actually, there’s a way to do this constitutionally – referendum – but these folks are in a hurry and have no concern about the legalities.

House Speaker Stumbo has roared his wisdom that no such constitutional amendment is necessary, but then he’s been for this windfall for a long time. Even the State Senate would probably go along with the referendum route, and the vote could come as early as November, but the horse lobby has the money to try to get its way, notwithstanding all the talk about the racing industry going broke. The matter will soon be determined in the backrooms of the capital, where things are bought and sold.

Tax breaks are not all bad. To the extent that they enhance public services and increase the possibility of jobs, they can serve a good purpose. Toyota of Georgetown is a good example. It’s obvious, however, that some of the moneyed interests, such as coal and electricity, get breaks that can’t be fully justified though they are eminently more justified than the tax breaks on the horse purchases. Subsidizing millionaire horse-owners and Middle East billionaires is a bit much.

Nothing is likely to change. According to the H-L, some $890 million is needed to keep things at the current level in spending, though the governor thinks another $600 million will be needed for “new expenses.” That nearly $1.5 billion could be offset by at least a portion of the private-sector responsibility of the “$2.4 billion the state will forego in sales-tax breaks for horses, coal and dozens of other items.” It won’t happen.

And so it goes.
Jim Clark