Last weekend, Courier-Journal reporter Tom Loftus wrote the seminal package on Kentucky’s screwy tax code.
“Kentucky tax breaks bleed billions of dollars from state government” included a well-done multi-media presentation, which you can see here.
That presentation breaks out Kentucky tax rates including the gas tax and the alcoholic beverage tax.
Among the many sources Loftus, the CJ’s Frankfort-based political reporter, interviewed for the package was Prof. Paul Coomes, the respected economist who recently retired from the University of Louisville.
But Coomes has not retired from using that academic personae and credibility. He’s just switched to using it for gain in the public sector.
Not only is Coomes interviewed at length in the CJ story, he’s in a long video interview you can see here.
The package includes this, which got a lot of Insider Louisville rearders’ attention:
A recent study by University of Louisville Economist Paul Coomes ranks Kentucky highest among states in taxes on wine, 10th highest on beer, and second highest in taxes on distilled spirits among states that do not sell spirits at state stores.
In the graphic with the package, Kentucky is rated “high” in taxes on alcohol compared to other states. Which it may be.
But was this objective finding of a neutral researcher?
Here’s what we got from one reader:
Retired UofL economist Paul Coomes has been making economic arguments in favor of lowering liquor and beer taxes, but the fact that he is on the payroll of the beer / liquor industry is not being disclosed, either by Coomes or by the media. Coomes appears prominently in today’s C-J article about tax reform, presumably as an objective academic with no personal interest in alcohol taxes. The article makes no mention of Coomes’ relationship with the industry.
Sources tell Insider Louisville Coomes did disclose a contract for a study for the Wine and Spirits Wholesalers of Kentucky when he addressed Gov. Steve Beshear’s Blue Ribbon Tax Commission last spring in Frankfort, though they say Coomes was clearly wearing his economist hat, not his lobbyist hat.
We emailed Coomes asking whether he revealed his role to Loftus for the article, but received no reply.
We did interview Dan Meyer, executive director of, and general counsel for, Wine and Spirits Wholesalers of Kentucky. Meyer said his industry group paid Coomes to do the tax study last fall. Meyer declined to say how much Coomes was paid, “but it wasn’t a lot of money. I can say it was a relative bargain compared to what we’ve paid economists in the past.”
Asked if Coomes was given any direction by the industry, Meyer said Coomes did not start “with any preconceived notions. We only asked him to look at the (tax situation) ….”
Had Coomes come back with findings that differed with industry policy positions, “we would have been in no hurry to disseminate that study,” Meyer said, laughing. “But we didn’t have to ask him to go get the findings we wanted.”
The credibility killer here isn’t Coomes doing a legitimate study for an important Kentucky industry.
The credibility killer here is the CJ never cited a significant source’s potential bias in an ambitious story.
A story that inevitably hangs on Coomes’ credibility as a respected economist, which has great currency in the media, as well as in the private sector.
In 2009, Coomes was commissioned by the Kentucky Distillers Association to write a study on the bourbon industry. Beshear seized that report to build a publicity campaign bitterly complaining about taxes on the industry in an attempt to roll them back … an attempt financed by the KDA.
The perfect symmetry of Loftus’ story is, Loftus documents how Kentucky’s pols and governors fell in love with the idea of cutting taxes, though not services, benefits and infrastructure:
In all, Kentucky’s tax code is laden with 253 tax breaks that add up to more than $12 billion in annual tax relief, according to the Governor’s Office for Economic Analysis. That’s more than all the revenue that goes to the state’s general and road fund funds combined.
This is far from Coomes’ first paid message.
Back in 2008, Stock Yards Bank paid Coomes to lend his expert authority and unimpeachable reputation as an economist to a CJ opinion piece belittling all those national pundits suggesting residential real estate was in for a bumpy ride.
From that special report:
We estimate that in 2007, between 0.6 percent and 0.8 percent of Jefferson County homeowners endured foreclosure, a rate one-third the size reported in the media. Around one-half of the foreclosed properties were owned by real estate investors, presumably too highly leveraged to withstand the recent slowdown in home price appreciation. It also appears that low interest rates and loose credit practices lured a number of unqualified households to move from rental to owner status, a disequilibrium that has been correcting itself the past two years …. However, the regional housing market so far appears healthy. Overly negative local reports can create a climate in which perfectly good investments are delayed, thus making the negative news self-reinforcing.
At least 15 percent of homeowners ended up in some stage of the Jefferson Circuit Court foreclosure process, existing home prices plummeted in every section of the city and county and over-ambitious developments nearly sunk at least three banks, including PBI Bank, the third largest Louisville-based bank.
The lesson here: When you read someone quoted as an “expert,” be skeptical.
Be very skeptical.
Oh … and the only thing worse than an expert is a cut-rate expert.