The Wall Street Journal Editorial Board is praising the Kentucky General Assembly for a “tax-cut turnaround.”
GOP-led lawmakers passed legislation this session that would incrementally reduce the income taxes in the state. The move drew Gov. Andy Beshear’s veto, but Republican supermajorities overrode the veto, making the legislation law.
In the editorial, the Wall Street Journal praised Republicans for the tax reform and said Beshear, and Democrats, could come to regret their move to oppose the legislation.
“Gov. Beshear rarely spares the veto pen—the tax reform was among 25 bills he sent back to the GOP-controlled Legislature this year,” writes the Wall Street Journal. “Still, Kentucky Democrats may regret aligning themselves against the tax reform.”
“Like most others, the Bluegrass State has run large surpluses in the past two years, and its rainy-day fund currently equals about 14% of annual revenue,” they continue. “Mr. Beshear pledged in January to foster a “vibrant, diverse economy that can support our workforce in the face of whatever challenges arise.” His veto of a restrained, incremental tax cut shows he’s more concerned with preserving spending.”
While taking a swipe and Beshear and Democrats the newspaper also points out that Republicans have moved in their thinking on the issue. It was just a few years ago when Republicans in the General Assembly rowed away from income tax cuts proposed by Republican Gov. Matt Bevin.
“The tax cut’s success also highlights the progress of Kentucky Republicans. It’s been four years since former GOP Gov. Matt Bevin proposed a path to end the income tax, only to be overridden by his own party in the Legislature. The revenue surge has made it easier to cut taxes, though the balanced-budget requirement would have helped Republicans rein in spending had they embraced the steeper cuts earlier.”
“Intensifying tax competition was likely another factor in the political turnaround. Kentucky shares its longest border with Tennessee, which boasts no income tax and has outpaced its northern neighbor in manufacturing growth. Ohio cut its top rate on income to 4.99% last year, and Indiana last month put its top rate on a downward path to 2.9% over seven years.”