WATERS: Overtime rules, faulty assumptions

Jim Waters head

I asked reporters who contacted me for comment regarding President Obama’s proposal to more than double the salary threshold for those getting overtime pay – from $455 to $970 – whether they also planned on including in their stories the number of people who could suffer financial harm by such a move.

They can’t.

No one knows, including the President and his supporters, who – in the same way – cannot back their claims that this policy will help millions of Americans and tens of thousands of Kentuckians.

Wouldn’t any thoughtful analysis of a mandate that could, according to the National Retail Federation, cost businesses $5.2 billion a year at least acknowledge that while some people may indeed be helped by such a policy, a downside does exist.

However, proposals like this aren’t about careful economic analysis. Rather, they’re driven to appeal to a partisan emotionalism.

Otherwise, Obama’s labor-department prognosticators would acknowledge what any Econ 101 student at the University of Kentucky knows: When a tax or regulation is enacted, a process almost subconsciously kicks in whereby those most affected by such government coercion begin searching for ways to avoid paying the Uncle Sam-subsidized piper.

A stark example of this occurred when President George H.W. Bush agreed to raise taxes despite his famous “read my lips: no new taxes” pledge during the 1988 Republican National Convention.

Bush eventually compromised with congressional leaders.

Both sides agreed that raising taxes on items like aircraft, jewelry and luxury yachts would produce some quick revenue and not harm middle-class Americans because those are items generally purchased by wealthier people.

Like Obama’s labor gurus assume that employers will not adjust to avoid his or her increased labor “taxes,” Bush and Congress apparently assumed no change would occur in the purchasing practices of wealthy Americans despite the tax hikes.

You do know what assumptions make out of us, don’t you?

Instead of raising more money to effectively address the deficit, Bush’s plan backfired as aircraft, jewelry and yacht industries laid off middle-class Americans who manufactured these items.

In the end, more money was paid out in unemployment benefits than was received in new tax revenue.

It might be worth noting for our progressive friends: wealthy individuals and companies don’t bear the brunt of tax increases or government wage mandates.

They simply pass the cost and consequences on in the form of pink slips for workers, reducing salaried managers to hourly workers and higher prices for consumers – all of which negatively impacts the very people they design such policies to assist.

On the other hand, reducing government interference in the marketplace and increasing incentives for entrepreneurship – accomplished by welfare-reform legislation passed by a politically divided federal government in the 1990s – can refuel and spark an economic recovery.

The Obama administration uses current employment numbers of salaried workers to support its claim that its new overtime rules will result in bigger paychecks for 4.7 million Americans, including 70,000 Kentuckians.

This assumes that David Douglass, CEO of Nashville-based Back Yard Burgers, Inc., doesn’t carry through with his plan reported by the Wall Street Journal to “figure out an arrangement” that places many of currently salaried general managers on hourly pay “so their total compensation doesn’t increase significantly, even accounting for overtime.”

If that could happen to salaried general managers, what might be in store for Kentuckians who are hourly employees but who dream of a brighter future with a salary and an opportunity?

Jim Waters is president of the Bluegrass Institute, Kentucky’s free-market think tank. Reach him at Read previously published columns at

KUHNHEIN: Kentucky tolls, taxes and liberty


Written by: Garth Kuhnhein

An open letter to our Kentucky Legislators…On Tolls, Taxes and Liberty

What strikes me about the discussion on taxes and tolls is that it really is about the “Blessings of Liberty” that are secured by the Constitution.  What many fail to realize is that personal property is essential to the “Liberty” that the Constitution sets out to secure “to ourselves and our Posterity.”  Those key words from the opening sentence from the Constitution.

John Locke in his writings points out that “all property is an extension of a person’s life, energy, and ingenuity.  Therefore, to destroy or confiscate such property is, in reality, an attack on the essence of life itself.”

Taxes be they in the form of tolls that are imposed by the power of government under the guise of increasing our “safety” or by the Local Option Sales Taxes in what is being touted by the LIFTER’s as “let the people vote” are exactly what John Locke was warning us about in his Two Treatises of Government, in 1689.

The primary purpose of government is to protect our property, to protect our liberty.  This is exactly why our governments, local, state and federal are a republic form and not a democracy.  You are our elected representatives and senators and you are to protect us from those that will take our liberty, take our property for their own enrichment.  The protection of our liberty is not a Republican or a Democrat issue.  It is up to you as individuals to recognize the importance of this founding principle.

If it were a Republican or Democrat issue the tolls as taxes and the LOST cause would be easily solved by the Republicans if they would follow the Republican Platform.

Taxes, by their very nature, reduce a citizen’s freedom.  Their proper role in a free society should be to fund services that are essential and authorized by the Constitution….We reject the use of taxation to redistribute income, fund unnecessary or ineffective programs, or foster the crony capitalism that corrupts both politicians and corporations.

Unfortunately Mark Twain recognized that the founding principles are too often lost on legislators and he is credited with the following, “No man’s life, liberty or property are safe while the legislature is in session.”

I urge all our legislators to support our funding principles to support our republic, to protect our liberties and to reject the “LOST Cause” and to reject tolls and the corporate welfare/crony capitalism that come with P3’s.

Garth Kuhnhein is a registered engineer, board member of Sanitation District No. 1, member of the Kenton County GOP Executive Committee, an active supporter of Northern Kentucky United and is involved in liberty issues across Kentucky.

Is LOST (local option sales tax) another unelected taxing authority?

Why do some politicians love to mislead voters? Think of it this way: A politician names his dog 5 Miles. He brags to his constituents that he walks 5 Miles every day. They believe he’s an exercise machine. He knows he’s lying, but sleazy politicians like to imply a false message with two meanings to fool stupid people.

Here’s an example. Tax-takers latest effort to separate you from your hard earned money is called LOST (local option sales tax). Their goal is to amend Kentucky’s Constitution during the 2015 General Assembly with a LOST amendment that will permit any city or county to place on a ballot a 1 percent sales tax INCREASE to finance special projects.

I have 4 questions.

1. Why is LIFT Kentucky misleading voters if the LOST project is such a great idea?

LIFT stands for local investments for transformation. Their homepage’s tagline for the local option sales tax effort is “an additional one penny sales tax.” Why are they lying to the voters?

Let’s say my unelected neighbors vote to exercise our local option sales tax because our community wants to build a state-of-the-art animal shelter to teach cats how to read.

If I understand LIFT Kentucky’s website, the additional sales tax will be one penny. So if I head to my local car dealership and purchase a $35,000 car, my old sales tax would be $2,100 (6 percent). With the new LIFT Kentucky LOST increase of “one-penny,” my new sales tax would be $2,100.01. I guess pennies add up, but I don’t think it’s going to be much of an animal shelter.

Thank God it’s only “an additional penny sales tax”, because if it was a 1 percent sales tax increase, my new sales tax would be an additional $350. Is LIFT Kentucky involved in false and misleading advertising? Is Democrat Obamacare architect Jonathan Gruber crafting their message? Are they calling us stupid? Do they believe everything in Kentucky costs $1?

Why can’t they just tell the truth? Here are a few local advocates whose names appear on LIFT Kentucky’s website:

Kenton County judge-executive Steve Arlinghaus,

Boone County judge-executive Gary Moore,

Campbell County judge-executive Steve Pendery,

Crestview Hills Mayor Paul Meier, and

Covington Mayor Sherry Carran and the Northern Kentucky Chamber of Commerce.

Not only does Mayor Carran and the NKY Chamber of Commerce want to increase the local sales tax, they also want to install tolls (tax increases) on the Brent Spence Bridge. OUCH!

2. What should be the voting threshold for LOST passing the General Assembly?

In June of 2014, Michigan’s state senate rejected a local option sales tax proposal. I found it interesting that “the joint resolution would have required a constitutional amendment, meaning it needed support from a supermajority of Michigan lawmakers this week and a majority of voters in the November general election. It failed in a 14-24 vote but could still be reconsidered.”

Changing the Kentucky Constitution is a big deal. It should require a supermajority (67 percent in both chambers) to pass the General Assembly.

3. How will LOST tax-takers propose placing the local sales tax increase on the ballot?

I researched the LOST bills submitted in the 2014 General Assembly (SB135) and (HB399) to understand the requirements for placing a 1 percent sales tax increase on a ballot. I found no details. I did find that many states require a petition process. I wonder if Kentucky will do the same.

In Iowa, they offer two methods for placing LOST on a ballot. 

  1. A petition is presented to the county board of supervisors. The number of signatures must be equal to 5 percent of the persons in the county who voted in the preceding state general election. Eligible voters of the county must sign the petition.
  2. A motion or motions of governing bodies within the county that represent at least half of the population of the county.

Since no one trusts politicians today, the “We the People” petition process makes sense. The petition threshold should be placed, at a minimum, of 25 percent of voters in the last presidential election. That’s was the requirement for placing the Northern Kentucky Area Planning Commission on the ballot. It would only be fair for the petition threshold to be set at the same level to increase a sales tax as it is to eliminate an area planning tax.

Since general election turnout is substantially lower than presidential turnout, the presidential threshold should be implemented. For example, the 2012 presidential turnout in Kenton County was 68,181. The 25 percent threshold would require 17,045 validated signatures.

The 2011 general election voter turnout in Kenton County was 26,423. If the 5 percent in the last general election method is used, the petition threshold would only be 1,321. That number amounts to less than 1 percent of Kenton County’s population increasing our taxes. No thanks!

4. Haven’t Kentuckians paid obscene federal, state and local taxes, plus countless other taxes, to finance “special projects.” UNCLE!

It’s not Kentuckians fault politicians and bureaucrats have mismanaged Kentucky taxes. Here we go again. Government shows up and spews this narrative:

Yea, we’re broke. We wasted all your tax money. Money for those projects isn’t coming from the state or any other government coffers so it must come from taxpayers. We need more taxes for more special projects for special interest groups that finance our campaigns. This time we want to increase your local sales tax by 1 percent or one penny if you’re dumb enough to believe that. To show you how noble we are we’re going to let you pull the tax trigger on yourself.

Doesn’t that sound just like pro-tolls rhetoric? Why are governments with millions and billions of dollars permitted to claim they’re broke, but citizens are never permitted to invoke the broke defense?

According 24/7 Wall Street’s 2013 Best and Worst Run States in America: A Survey of All 50, Kentucky is ranked as the 38th worst run state. Kentucky has the 5th lowest median household income ($41,724) and the 5th highest percent of citizens below the poverty line (19.4 percent). Kentucky is one of the poorest states in the nation. Kentuckians are broke and can’t afford any more taxes.

Isn’t having a small percent of your neighbors with the power to raise your taxes just another unelected taxing authority? I thought Kentuckians hated unelected taxing authorities? Please follow this upcoming legislation very closely. Contact your state representatives and urge them to vote against LIFT Kentucky’s LOST agenda.

FCC rules no more NFL blackouts

The NFL can’t seem to catch a break these days.

The Federal Communications Commission did away with the sports blackout rule Tuesday. That means cable and satellite TV providers can begin airing games regardless of how many tickets have been sold. The NFL says the blackout rule is necessary to ensure attendance at games remains high.

In a unanimous 5-0 vote, the commission eliminated the regulation that was implemented in 1975. Regulators and many lawmakers say it unfairly punishes football fans.

“It’s a simple fact, the federal government should not be party to sports teams keeping their fans from viewing the games — period,” Democratic FCC Chairman Tom Wheeler said. “For 40 years these teams have hidden behind a rule of the FCC. No more. Everyone needs to be aware of who allows blackouts to exist, and it is not the Federal Communications Commission.”

With the NFL’s highly publicized problems with domestic violence among some of its star players, and a renewed focus on the leagues tax status and anti-trust exemption, the FCC ruling is the equivalent of a sack that sets up a 4th and long. But if the NFL’s statement immediately following the ruling is any indication, the league intends to stay on offense.

“NFL teams have made significant efforts in recent years to minimize blackouts,” the NFL responded in a statement Tuesday. “The NFL is the only sports league that televises every one of its games on free, over-the-air television. The FCC’s decision will not change that commitment for the foreseeable future.”

Obama Administration issues new rules to slow tax inversions

The Treasury Department tightened tax rules Monday to deter U.S. companies from moving their legal headquarters to lower-tax countries, part of a White House effort to slow a wave of so-called corporate inversions that effectively reduce federal revenues.

Treasury officials took action under five sections of the U.S. tax code to make inversions harder and less profitable, removing some of the appeal that has made the transactions more common in recent years, particularly in the pharmaceutical industry.

In an inversion, an American company reincorporates for tax purposes in a tax-friendlier country such as the U.K. or Ireland, typically while maintaining much of their operations in the U.S. Most recent inversions sprang from mergers of a U.S. firm with a smaller foreign firm after regulatory steps taken during President Barack Obama’s first term curbed other types of inversions.

The Treasury rules will make it harder for companies that invert to use cash accumulating abroad—a big draw in recent deals. In addition, the government has made it more difficult to complete these overseas mergers.

The tax changes took effect immediately, officials said, and applied to all deals that hadn’t closed by Monday.

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Congress still flirting with taxing the Internet

Senators look to lame-duck session to pass Internet sales tax bill

Top Senate lawmakers think they have found a way to allow states and local governments to tax Internet purchases: Link online sales taxes to separate legislation prohibiting Internet access taxes and pass it in the post-election “lame duck” session of Congress.

The moratorium on access taxes runs out Dec. 11. A bill by Sen. Mike Enzi, R-Wyo., titled the Marketplace and Internet Tax Fairness Act, would extend the moratorium for a decade while allowing states to require online merchants to charge sales taxes.

Senate Majority Whip Dick Durbin, D-Ill., the number-two ranking Democrat, is a co-sponsor. The backers are hoping that access taxes — which would slap levies on customers for their Comcast or Verizon Internet accounts — will be the more unpopular of the two provisions and that Congress will accept the sales taxes to get rid of them.

“Both … have been debated at length and discussed in numerous committee hearings. Neither are new issues and Senator Enzi believes both should be signed into law this year,” said Enzi spokesman Daniel Head.

Head said the legislation had a strong chance to be voted on in December, which lobbyists on both sides expect as well. A Senate Democratic leadership source said they were “keeping their options open.”