Experts Say KY Should Hit Pause on Tax Cuts Amid Recession Fears / Public News Service

The amount of income tax paid by Kentucky residents is set to drop slightly starting next year, but experts say the Federal Reserve’s decision to raise rates set the stage In preparation for an impending recession, they are concerned that further tax cuts could deplete state budgets and affect critical public services.

Jason Bailey, executive director of the Kentucky Center for Economic Policy, said the state uses tax dollars to help rebuild communities from natural disasters. He said given the level of devastation from recent floods in eastern Kentucky, the state will provide thousands of people with safe housing, access to water, and other basic needs as winter approaches. I argued that I must be able to help

“The flood damage in eastern Kentucky was extensive,” observed Bailey. “About 1,600 homes have been destroyed, bridges and schools need to be replaced. The federal government is providing some resources, but not enough given the scale of the disaster.”

Earlier this year, the Republican-controlled state legislature voted to override the governor’s veto. House Bill 8a law outlining a gradual reduction of the state’s current 5% personal income tax rate to 4.5% next year, based on the amount of Kentucky’s General Fund.

Bailey acknowledged that Kentucky added a $943 million surplus to the Rainy Day Fund, but if a recession hits, permanent tax cuts skewed toward the wealthy would ultimately He warned that it would take money away from public schools, access to health care and transportation.

“These tax cuts will overwhelmingly go to the wealthy at a time when Kentuckians every day need the nation’s services to ease a painful recession,” Bailey argued.

He pointed to childcare as an example of how state dollars from tax dollars can be used to support a statewide childcare industry and help families already struggling with inflation and high gas prices.

“About half of Kentuckians live in the childcare desert,” Bailey noted. “I’ve seen daycares closed statewide. People can’t afford it. And it’s not sustainable.”

American Rescue Plans Act funding for child care centers expires in 2024. Recent research According to the Pritchard Commission, 72% of federal child care centers say they will raise tuition without additional federal funding. About 22% said they would close their stores.

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Wisconsin is 1 of 33 states Allow social security benefits to be extended to teachers.

As the program’s future is debated, a retired educator said it was important to maintain certainty if the country did not want more people to leave the profession. Over the course of the campaign, some Republican candidates have floated the idea that their opponents will reduce or eliminate the program.

John Bigley, a retired eighth grade science teacher from the Rheinlander area, said he received a pension, but additional support from social security payments could make retirement especially difficult during periods of high inflation. He added that it would reduce the financial burden later on.

“We have what we have now. It keeps our heads above the water,” Bigley admitted. “We’re less stressed.”

But he worries about beneficiaries who don’t have other retirement savings. Bigley added that threatening to cut benefits will not help retain teachers amid a national shortage of educators.

Wisconsin Republican Senator Ron Johnson is one of those proposing changes to the program. He defended his approach, saying he wanted to move to discretionary spending to implement necessary reforms.

Alex Lawson, executive director of Social Security Works, said older Americans in particular are feeling the weight of higher consumer costs. He argued that retired teachers are among the many individuals who deserve to keep the profits they make after dedicating their lives to a particular profession.

“We need to pay our teachers more. I say it across the board,” Lawson argued. We need to make sure we don’t have to be afraid to put our hands in our pockets and take our profits.”

Teacher advocates point out that teachers are also not facing job security as school districts struggle with their own budget problems. They argued that at least that’s what teachers get through Social Security if they don’t work long enough to secure a pension.

It is only a guideline 1 in 5 teachers In the United States, you can receive a full pension.

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Wisconsin’s Affordable Care Act average premiums would have been 56% higher this year without temporary federal subsidiesand small business advocates say the new enhancements will be of great help if small businesses are trying to get their finances back on track.

The Inflation Reduction Act included provisions to extend the ACA’s premium subsidies through 2025. Additional tax credits were from previous pandemic relief packages that were set to go into effect later this year.

David Chase, vice president of outreach for Small Business Majority, said the extension will remove a lot of headaches during a complicated time for small business owners.

“Only about half of small businesses can afford insurance,” he said, adding that “the number has fallen even further since the pandemic, making the anti-inflation legislation even more important.”

Chase acknowledges that while the Affordable Care Act has been a game changer for small businesses since its inception, owners still face challenges. He notes that the cost of health care continues to rise, and one recent analysis suggests marketplace insurers are already proposing premium hikes for 2023.

Wisconsin-based Midwest Regional Manager Sean Feteplace main street alliance, said Wisconsin is one of 12 states that have yet to expand Medicaid under the Affordable Care Act, so the extension would be particularly helpful here. He said there are added barriers for small business owners trying to build staff these days.

“Many people go to work. They work for big companies purely to get health insurance,” he said. “Some people don’t start businesses because they need health insurance. Some people only do business part-time because they need health insurance.”

The Inflation Reduction Act also allows Medicare to negotiate the price of some drugs. Analysts say it could also help small business owners in the future, as prices have soared making it harder to choose which plans to offer their employees.

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childhood poverty cut in half Expanding federal programs such as child tax credits and stimulus payments during the Covid pandemic also kept about 5 million Americans from falling below the poverty line.

Advocates of the poor argue that these benefits have already been lost because the most beneficial programs were not extended, and high inflation is now affecting families as well.

Joe Diamond, executive director of the Massachusetts Community Action Association, a coalition of about 23 community action agencies, said advocates are using the lessons learned during the pandemic to help improve people’s lives. rice field.

“We were inspired by the resilience of the people we served, and by the proving efficacy of programs that were able to run during the pandemic,” Diamond said. We now know that our mission also includes doing our best to sustain these programs and continue to do all we can towards our goal of reducing poverty.”

Proponents advocate strategies that include creating a state-funded child tax credit, providing adequate guaranteed income, and supporting broad outreach to ensure all families receive the benefits they need. I suggested.

Tax reform and the public good are not the only answers.

Nancy Wagman, research and kids count director for the Massachusetts Center for Budget Policy, said people need good jobs with rising wages.

“Poor people work for the most part,” Wagman noted. “They are either underpaid or just working in jobs with precarious and unpredictable hours. We can make a difference.”

Wagman updated his pre-pandemic report Challenges faced by the poor in Massachusetts due to their historic underinvestment in public transportation, quality childcare, and affordable housing. The challenge is compounded by the pandemic and institutional racism.

For example, black WWII veterans were denied GI bills, and today black and Latinx workers struggle to get out of low-paying jobs.

Wagman argued that states could play an important role in removing barriers to opportunity by reforming tax laws.

Meanwhile, the need for assistance remains acute for those living in remote areas. The Coalition is hosting its first in-person gathering since the start of the pandemic today. They say they are excited to see their member organizations implement the lessons learned over the past two years, making them even more committed to the challenge of ending poverty.

Laura Meisenhelter, executive director of North Shore Community Action Programs, said the need for help has increased since federal pandemic support ended.

“We’ve had more gas cards to help us put gas in our cars and grocery store gift cards so we can support our families,” Meisenhelter outlined. I’ve done it more.”

Anti-poverty advocates have turned to Essex County, the state’s third most populous county, to highlight challenges related to housing, food insecurity and job development. They hope their work will serve as a model for other counties in the future.

Beth Francis, president and CEO of the Essex County Community Foundation, explained that it is one of many charities that support such efforts.

“These regional action agencies are located throughout the Commonwealth and do very important work,” Francis stressed. “We are proud to be able to fund them. We work with the most vulnerable families and I think we need to shed some light on them.”

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