Tax and spending panel looked for answers to Kentucky’s pension crisis
September 11, 2017
The theme of the panel was clear: the state of Kentucky has a tax spending problem.
A panel discussion titled Tax Policy and Economic Growth in Kentucky was put on by the Schnatter Institute Thursday evening. The discussion was centered around entitlements and pension spending at the state level.
The four members of the panel were Arthur B. “Art” Laffer, Founder and Chairman of Laffer Associates, Jason Bailey, Founder and Executive Director of the Kentucky Center for Economic Policy, Chris R. Bollinger, a professor of economics and the Director of the Center of Business and Economic Research in the Gatton College of Business and Economics, and William Hoyt, a Gatton Endowed Professor and Chair.
The event began with Laffer, who served as a council member for President Ronald Reagan’s Economic Policy Advisory Board from 1981 to 1989, giving a brief introduction to tax policy and reform at the federal and state levels while discussing some of his research findings of other states' introducing income tax.
“When (George Romney) introduced the income tax, Michigan was 5.2 percent of the U.S. economy,” Laffer said. “Today, Michigan is 2.7 percent of the U.S. economy.”
Laffer’s opening was followed by the four panelists' being asked to answer a short series of questions on problems with tax spending in other states as it relates to Kentucky’s own tax problems. A frequent theme of the panelists’ answers was the idea of broadening the base and lowering the rates, growing the number of people a tax rate applies to while decreasing that same rate.
Notecards were passed out for the audience to write down questions, which were answered later on in the discussion. Many of the audience's questions were focused on Kentucky’s own tax problem and its major issue with retirement spending. The state’s looming pension crisis was a focal point during its 2015 gubernatorial election.
The final question the panel answered was what the first steps Kentucky needs to take to engage in its tax reform. All four economists seemed to agree that Kentucky’s tax problem needs to be addressed sooner rather than later.
“Lower the rates, broaden the tax base and make Kentucky attractive not only to outsiders to move in, but also for Kentuckians to work in,” Laffer said.
Video of the discussion will be available on the Schnatter Institute website.