08/22/2007
CONTACT: Tom Underwood, 502-223-5322 or Jim Brown, 615-874-5288
FRANKFORT, Ky. -- The following statement from Tom Underwood, state director of the National Federation of Independent Business/Kentucky, may be used in whole or part as an op-ed in your media outlet, or as part of any related story. To obtain a headshot of Underwood, please e-mail jim.brown@nfib.org.
Recently, I met a gentleman in the construction industry who last year said his business filed 63 municipal and county tax returns. I met another who filed over 100.
Many small-business owners, as I have traveled the Commonwealth, have told me they need relief from the paperwork tar pit. They say they would rather be growing their businesses and adding more jobs, rather than fill in more forms for each locality.
Kentucky has the third most counties -- 120 -- behind Texas (254) and Georgia (159). Kentuckians have a strong sense of place, but with that, we've enabled locales to erect barriers not unlike the feudal lords of long ago. In the days of yore, Medieval Lords along the Rhine River stopped merchant shippers at each castle around every bend, requiring payment of "tribute" to pass safely.
The similarities in today's Kentucky are striking. Government entities are requiring business entities to purchase business licenses, pay net profit taxes and withhold local payroll taxes from paychecks. Many adjacent taxing entities require the same when businesses cross into their territory.
More specifically, businesses are required to prepare a tax return, acquire a business license, and account for and report wages of each employee for time spent in the municipality or county. The business can then file a calculation in the government district where they are located to absolve the employees of the payroll tax for time spent outside the "home" area.
Kentucky has literally hundreds of cities and towns and countless taxing districts. Yes, these entities provide important services to their local citizens, and they strive to improve the quality of life for their residents. Unfortunately, many are continually cash-strapped, and some are staring at unmanageable pension benefit costs. Understandably, they don't want to lose revenue sources.
Kentucky has created a paper-chase nightmare that douses the spirit of entrepreneurs and sometimes even handcuffs them. Energies that could be spent developing their enterprises and adding jobs rather goes into the preparation and filing of repetitive paperwork, all so local governments can collect relatively small checks.
Members of the National Federation of Independent Business, Kentucky's leading small-business advocacy association, are looking for relief from Frankfort. One potential solution would be to establish a central revenue collection agency that collects and distributes these taxes based on a single, comprehensive tax return from the business owner. A similar system is currently being used in Frankfort to collect and distribute revenues from the telecommunications tax to local governments.
Whatever the solution, let's move out of the Dark Ages and make sure our Rhine-like system becomes a thing of the past.
Tom Underwood is state director of the National Federation of Independent Business, Kentucky's and the nation's leading small-business advocacy association.
