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Constituents of the 2nd Congressional District of Kentucky filled Pettus Auditorium at St. Catharine College (SCC) on Thursday to get a word with Representative Brett Guthrie.
The congressman’s listening session came on the heels of President Barack Obama’s State of the Union address, which Guthrie referred to often.
Guthrie discussed a flatter tax rate, Medicare, bringing jobs back to the United States, college tuition, federal funding for schools and care for the mentally ill, among other topics.
Dr. David Donathan, a professor of management and the chair of the business, management and CIS department at SCC, asked Guthrie about movement on a flat rate tax.
“(A flat rate tax) theoretically would reduce hundreds of millions of dollars in government costs to process taxes and increase hundreds of millions of dollars in revenues,” Donathan said.
Guthrie said what Donathan had probably heard of was different than a flat tax.
“Our tax code is 7,000 pages,” Guthrie said. “You can sit down with an accountant with your records and you’ll come up with and go over the different tax liabilities from each. We propose to make it flatter, not flat.”
The congressman said that 47 percent of people aren’t paying income taxes under the current system.
“We don’t lower it, like if you’re making $10,000, (of) that 10 percent tax you’re paying none, (and) all of a sudden you’re paying $1,000. What we do is we bring all the brackets closer together,” he said.
People paying nothing on income taxes wouldn’t jump up into a tax bracket under the current proposal, he said.
Guthrie said physicians’ offices and medium-sized businesses are being ‘crushed’ under the current tax code.
“So if you’re a physician, making $300,000 a year, and you’ve got a 35 percent tax liability, on average it’s a third. That’s $100,000,” he said. “Are you going to spend $50,000 or $60,000 with these high-end firms, I’ve talked to some accounting firms to get these numbers, you’re going to spend $50,000 to get it cut in half, you’re saving $50,000.”
Guthrie said if a person’s income was $10 million, for instance, then it would make sense to hire a firm to cut tax liability in half.
“You see an ad going on TV right now, you can hire Ernst and Young and they spend $100,000 to put into some trust and all these other things that you do,” he said. “But you’re going to spend that $100,000, whatever it costs, it’s around there, for a very big, difficult estate. But you can get your tax liability cut in half. That’s a big savings, isn’t it?”
Guthrie said he would like to make accountants’ jobs different after Dr. Harry Nickens, dean of the school of health and human sciences, asked what would happen to CPA’s if the tax code were made simpler.
“Somewhere along the way, there’s going to be tens of thousands of individuals who lose their employment in that accounting arena. What’s going to happen to those folks?” Nickens asked.
“There’s still audits and things like that that go on,” Guthrie said. “Somebody said $100 million goes for preparing taxes in this country. So yes, if we made taxes simpler, that industry would change.”
Springfield Mayor Dr. John Cecconi asked Guthrie how the federal government was planning to bring jobs back to the United States.
“The president talked about that,” Guthrie said. “He hit the nail on the head on trying to bring businesses back. My father worked in a factory. The pathway to middle class has been through the factory floor. I’ve always said that and believe it.”
He said one way to get businesses back is by lowering the tax rate in the country.
Under the current system, he said, a profitable business overseas (such as General Motors in China) can’t take the profit it makes overseas and invest it in the United States without paying a 35 percent tax.
“So, they just leave the money overseas,” Guthrie said. “There’s like a trillion dollars, there might be even two trillion, that would come back and invest in the United States if we would give that tax credit.”
Guthrie also touched on the necessity of workers developing their skills.
“If you’re not going to go beyond high school, and develop your skills, if there’s a politician in the world that tells you they can get you in the upper-middle class without developing your personal skills, they’re not telling you the truth,” he said. “There are people that have dropped out of college and started Microsoft, I get it. But those are rare and far between.”
Guthrie said putting prestige in community colleges and technical schools is important.
“Once you get the skill, nobody can take it away from you,” he said. “You may have to go find where the job is, but you have that ability to work. If you’re unskilled, in a high-paid job, and that job goes away, and of course they’re going away, it’s just hard to be unskilled and walk into another high-paying job.”
SCC President William Huston expressed his concern to Guthrie about federal assistance for students through Pell grants and low-interest student loans.
“When you have a trillion-and-a-half dollar deficit, it’s going to be about one trillion this year, we’ve got to look at everything,” Guthrie said. “I’m one (that asks), ‘are we borrowing money to consume something or are we borrowing money to invest in something,’ whether it’s a bridge or a highway or a life in college and tuition.
Guthrie said the universities have been getting less funding on the state level.
“The state program, the state government is putting less in universities,” he said. “Substantially less, even than they were a few years ago.”
Frankfort isn’t spending less money, though, he said.
“Frankfort is spending about a third more money than they were just a few years ago,” Guthrie said. “But it’s explosive growth of Medicaid and prisons. They’re consuming more and more of the state budget.”
There have been attempts to get a handle on the growth of prisons, Guthrie said, including a program the governor is trying to implement.
“If not, our whole budget is going to be Medicaid and prisons if we don’t watch what we’re doing,” he said. “Which puts more pressure on the universities to raise tuition. It puts more people on Medicaid because they don’t get college degrees. It becomes, you start chasing your tail.”
Washington County Elementary School Principal DeVona Hickerson asked Guthrie about federal funding for the school system.
She said that school administrators received an email in the fall saying that the federal government may take a nine-percent cut of the money given to the state, which would affect money received on the local level.
“Right now, I’m sitting with nine-percent of the budget locked up, which pays for programs, supplies and staffing for the school,” Hickerson said. “We were supposed to know something in January and we still don’t know anything, and if that comes in April and they say, ‘We’re going to take $10,000 or $15,000 of your money,’ I mean, what do we do in schools about those kinds of things when 70 percent of our population is on free and reduced lunch?”
The timing of the cuts frustrated her, she said.
“How do they think we’re going to balance that budget at that level when they make those cuts in the middle of the year?” Hickerson said.
Guthrie said he knew a little bit about what Hickerson was talking about, but he was going to have to find out more details in order to properly respond to her question.
“What’s frustrating is that the programs that you’re talking about have not been authorized I think in nine years,” Guthrie said. “And it’s the No Child Left Behind bill that needs to be re-authorized and changed. I think everybody in Washington D.C. says there needs to be improvements, if not complete change in the No Child Left Behind laws.”
He added that bills that aren’t ‘big’ bills, such as the stimulus bill, the financial services bill and the health care bill of the last few years, have trouble passing when focus is on the larger bills.
Hickerson also asked what members of congress were doing for the mental health services for adults.
“You can’t find a residential setting for a mentally ill adult,” she said. “Most of the state settings, state homes are for younger people. So, you have people who get tossed into places like Eastern State, but it’s an acute care place. And then they get released out, they’re not long-term.”
Hickerson said it seemed to her that funding was focused on one age group, but that the elderly or mentally ill adult patients get pushed aside.
“We need to look with you on that because I’m not sure if that’s state rules or if federal sets the policy on that,” Guthrie said. “A lot of money for programs like that, most of the Medicaid flows to the state and the state administers it.”
Nickens added a final observation about politics in the country.
“I don’t know how to do your job or the jobs of other congressmen and senators, but if you look at the confidence level that you read in the polls, that the American people has with the party system or the party administrator, (it’s) 13 percent,” he said. “I don’t know how to do it, but you folks have to get together and compromise.”