Supply-side economics will bankrupt Kentucky
Kentucky is a state — or a commonwealth. Government has legitimate functions and requires funding to perform them. This past year’s state budget was some $10.2 billion. This amounts to $2,300 for every man, woman, and child in the state.
How is this money to be raised? Currently we have a mix of income taxes both personal and corporate, sales taxes, inventory taxes, user fees, and so on. Bevin says that he wants to eliminate the state income tax, the inventory tax, inheritance taxes, in short — just about every source of revenue except sales taxes.
A sales tax is the most regressive tax possible. The reason is because the poor and middle class have a higher propensity to consume and they have less money to consume with. The wealthy do not need to spend all their money and are thereby able to avoid sales taxes.
According to Laffler and other acolytes of “supply side economics,” the rich will invest their windfall from reduced income taxes in job creating enterprises and the tax cut will pay for itself! In fact cutting taxes will result in more tax revenues.
This is a fairy tale. There has never been any solid empirical evidence for it and when it was tried in Kansas by Reich wing governor Sam Brownback, it was a disaster! The state had its credit rating downgraded to near-junk status. It was headed for bankruptcy and the state legislature over-rode his budget in an act of fiscal sanity.
The grand experiment — as Brownback called it when he was elected — turned out to be an absolute disaster and now Bevin wants to inflict the same experiment on the state of Kentucky. Insanity is doing the same thing over and over again and expecting a different result. Those who do not learn from experience are bound to repeat it! These proposals by Bevin are insane!