Senator Rand Paul, R-Ky., met with nearly a dozen community and business leaders in Louisville on Monday to discuss his push for Economic Freedom Zones in the city’s West End.
The proposal would dramatically cut income and corporate tax rates for companies and job creators, and eliminate the capital gains tax.
Under Paul’s plan, eligible cities and counties would be those that are either at-risk or have entered Chapter 9 bankruptcy, such as Detroit.
Among the other requirements, also eligible are localities with a jobless rate 1.5 times the national average or with 25 percent of residents living before the poverty line.
“It for Louisville would be $650 million stimulus over ten years,” says Paul. “The difference between this and some traditional ones is my conception of a stimulus is to just leave the money. This is money that’s already in west Louisville and that’s normally going to Washington. We would simply not send it to Washington.”
The roundtable discussion took place at the Louisville Glass Company with just over a dozen small business owners, including Teresa and Frank Bridgewaters, the developers behind the Walmart deal.
Many in attendance quizzed Paul about reducing the corporate and income tax to 5 percent, using eminent domain, and similarities with President Obama’s Promise Zones initiative targeting parts of southeastern Kentucky.
Paul says the federal government can help induce more investment in urban areas such as west Louisville by getting rid of burdensome taxes.
The Rev. Kevin Cosby, who attended the roundtable discussion, told Paul the “status quo is unacceptable” in the West End and asked about the bill’s progress.
“We are descending into the an abyss and something must take place,” he said. The legislation has been co-sponsored by Senate Minority Leader Mitch McConnell, R-Ky., but Paul said he hopes to get Democratic support, including from Congressman John Yarmuth of Louisville.
Critics of the plan have argued that designated enterprise zones do little to move business to certain areas and are nothing more than dramatic cuts and deregulation efforts.
Others who attended the meeting encouraged Paul to add a requirement that areas receiving freedom zone tax cuts must hire a certain percentage of local workers from the neighborhood.
“As I look at it, to actually help people you want to hire people living in those areas,” says Tommie Causey, an economic development specialist with the U.S. Small Business Administration in Louisville. “You need to provide some incentives for companies that locate in those area that receive those benefits to to hire those residents.”
“The commonality between all of these ideas is try to create wealth in those areas where there’s blight and low-income. The way they’re going about it is a different method, but it’s pretty much the same to an extent.”
In many ways Paul’s plan mirrors another federal program called the Historically Underutilized Business Zones (HUBZone), which “helps small businesses in urban and rural communities gain preferential access” when applying for grants.
But unlike HUB Zones, Paul’s plan does not have any provisions mandating the hiring of local workers at any level. After the roundtable, the senator said he’ll consider that suggestion.
“I think currently we don’t have a requirement because we think if the business is there more of the jobs will be local,” Paul told WFPL. “But in order to get more support for this, I said that we’d open the discussion and have another discussion to say maybe there could be a requirement that some of the people have to be hired from the local community.”