Paul: Development should come from tax breaks, not taxes

Ralph B. Davis rdavis@civitasmedia.com

October 24, 2013

PAINTSVILLE — Sen. Rand Paul proposed Thursday using tax breaks instead of government spending to boost economically depressed areas like Appalachia.

During a brief stop to a packed room at Frank’s Place, in downtown Paintsville, said his plan makes more sense than the current system, because it rewards those who have already demonstrated their ability to create economic growth.

Paul says he plans to introduce a bill next month to create “Economic Freedom Zones” in areas where unemployment is higher than 12 percent. Under his proposal, personal and corporate income tax in those zones would drop to 5 percent and employee withholding and the employer FICA match would be reduced by 2 percent, for a period of five years. The rates would then be gradually raised back to normal over another five-year period.

“This would be an incredible stimulus,” Paul said. “For Paintsville and Johnson County, it would be about $20 million over five years, or $30 million over a 10-year period. And that money would be spent here in town or saved or start new businesses or the people who own this restaurant might hire new employees.”

Paul said his plan is different from typical methods of economic development, traditionally embraced by Democrats.

“The Democrats propose this: ‘Let’s tax Houston, Texas, and I’ll give some of it to Paintsville,’” Paul said. “‘But I’ll decide who gets it and I’ll decide you can start a business, and I’ll tell you why don’t we build some solar panels in Paintsville, Ky.?’ Well, we tried that. We gave $500 million to the 20th-richest man in the country to build solar panels. Remember Solyndra? Well, he lost all $500 million. I’d just as soon he lost his own.”

Paul also touched on the coal economy in Appalachia, saying that while he supports sensible environmental rules, the government is “out of control” and has gone too far.

“The Clean Water Act is well-intentioned,” Paul said. “I agree with it. It says you can’t dump chemicals into moving streams and navigable waters. That’s fine. I’m fine with that. I don’t think any company should be able to go out and dump chemicals in our rivers or our lakes. But know what, over the years, that has transformed into? They say that clean dirt, fill dirt to raise the elevation of a lot you’re trying to sell or build on, they say clean dirt is a pollutant and your backyard could a navigable river.

“And this has affected the coal industry. What they say to the coal industry is that water that rains on top of a hill and runs off the side of the hill, wherever it runs off, they say that’s a stream. So when you hear this nonsense that coal companies are polluting the streams, they’re putting dirt in a crevice in the mountain. They’re not polluting a stream. If they are polluting a stream, I don’t care if it’s coal company, they shouldn’t do it either.”