When Kansas lawmakers overrode Gov. Sam Brownback and rolled back his deep tax cuts, pundits around the nation saw lessons that other states, President Donald Trump and congressional Republicans should learn. Here are some edited excerpts from a variety of sources.
This wasn’t done by a bunch of tax-happy liberals. As in Missouri, Republicans hold super-majorities in both houses of the Legislature.
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Brownback had promised in 2012 that the cuts would create enough growth to pay for themselves — the classic argument of supply-side economics. Proponents, including St. Louis’ own anti-income-tax crusader Rex Sinquefield, promised an immediate and lasting boost to the Kansas economy.
The Missouri Legislature passed a kind of Kansas Lite tax cut in 2014. It will cost the already-underfunded state budget $80 million in the fiscal year beginning July 1 and at least $160 million the following year. As in Kansas, the wealthy get most of the benefits. Someone earning the median household income will save about $45 a year.
Brownback says his “real live experiment” just needed more time and more spending cuts. Kansans decided they’d rather have a decent place to live instead. It was the right decision.
The press accounts gleefully talk of how “moderate Republicans” joined with Democrats to raise taxes to address exploding state deficits. But substitute “Republicans backed by teachers unions” for moderate Republicans, and the real picture comes into focus. At bottom the Kansas tax vote was as much about unions getting even with the governor over his education reforms, which included making it easier to fire bad teachers.
Mr. Brownback’s reform mistake was that in eliminating taxes on “pass-through” small businesses, the governor created a loophole that allowed law firms, accounting agencies, consultants and many others to declare wage income to be business profit and pay little or nothing. This caused lower tax revenues than Brownback predicted, and bigger deficits when the legislature refused to cut spending. What do you know: Tax rates affect taxpayer behavior.
Iowa Republicans take note: The Kansas experiment is over.
Iowa Gov. Kim Reynolds continues to take the position that the taxes currently paid to the state are too high. The theory that a state can slash its way into prosperity — and make itself attractive to businesses by dramatically cutting spending on schools, law enforcement, human services and natural resources — has been proven wrong on numerous occasions.
Brownback got half his wish. He succeeded in creating a red-state model for the nation, but it stands now as an example of how not to construct a state budget.
Let’s hope Kim Reynolds is paying attention.
When I look at events in Washington, it seems to be that Republicans have moved on in ways that may eventually cause us to think about the Kansas experience almost fondly, as a relic of a better time when conservatives at least pretended to have intellectual justifications for their policies and proved, in practice, to care at least a bit about results.
For there was an idea, a theory, behind the Kansas tax cuts: the claim that cutting taxes on the wealthy would produce explosive economic growth. It was a foolish theory, belied by decades of experience: remember the economic collapse that was supposed to follow the Clinton tax hikes, or the boom that was supposed to follow the Bush tax cuts?
But still, it was a theory, and eventually the theory’s failure was too much even for Republican legislators.
Brownback made the most serious tactical blunder of his governorship in 2012. The governor’s own hubris, coupled with the Kansas Chamber of Commerce’s demand that income taxes be eliminated, compelled his misstep. But Brownback doubled down and joined in the Chamber’s purge of mainstream Republicans and Democrats in 2012 and 2014. A handful of businesses led by Koch Industries of Wichita poured cash into the Chamber’s campaign war chest.
Kansans should give a standing ovation to those lawmakers, particularly Republican legislators and their leaders, who defied an obstinate governor, returned sanity to state finance, and acted in the best interests of Kansas as a whole.
The Kansas Republicans who voted to abandon Brownback’s dead-end policies have been described in news stories as “moderate,” but many are actually quite conservative. They just decided to put reality before ideology.
President Donald Trump and the Republican-led Congress, however, threaten to run Brownback’s experiment on a national scale, with predictably disastrous consequences.
The GOP trembles before tax-cut guru Grover Norquist, who wants to reduce government “to the size where I can drag it into the bathroom and drown it in the bathtub.” But it is failed trickle-down ideology that deserves to be snuffed out. And not just in Kansas.
The principal architects of the Kansas tax plan were Stephen Moore and Arthur Laffer, who predicted a “near immediate” positive impact on the state’s economy. When that didn’t occur, Moore substantially backpedaled from the “near immediate” claim, doubled-down on his tax policy recommendations and used inaccurate data to justify the tax cut..
Moore and Laffer, along with fellow tax-cut enthusiast Lawrence Kudlow, advised candidate Trump on the tax framework that he outlined in speeches in August and September 2016.
Unlike Kansas, the federal government doesn’t have to balance its budget, but both the president and House GOP leadership have adopted budget frameworks and policy proposals that would pair their tax cuts with large cuts to domestic investments to try to reach that goal.
The tax cuts for the wealthy frequently advocated by Republican politicians are viewed unfavorably by many voters, polls show. The Public Religion Research Institute, a nonpartisan group that conducts public-opinion surveys, found that 57 percent of Americans nationally, including over a third of Republicans, support increasing taxes on those earning at least $250,000 a year. By contrast, Brownback’s policies reduced them drastically.
When Brownback came to office, the state’s top tax rate was 6.45 percent. He immediately pushed the Republican Legislature to sharply reduce that rate, and Oklahoma Gov. Mary Fallin used that move to push for income tax cuts here, too.
In Kansas and Oklahoma, the argument that cutting state income taxes would produce prosperity was politically successful, if an economic failure.
Oklahoma lawmakers also considered reversing course on tax policy this year, but, sadly, fell short of taking needed action.
We hope Fallin is giving as much consideration to the need to keep up with the neighbors today as she was back when she was determined to match Brownback’s tax-cutting strategy.
There is a significant number of Georgia legislators who want to do the same thing here that Brownback did in the Sunflower State. They want to reduce state income taxes, especially for businesses and corporations, to as close to zero as they can get.
They would make up for the shortfall in revenues by raising the state sales tax. What they don’t mention is that it would probably require a sales tax of 12 or 13 percent to replace the income tax.
Like it or not, the state income tax is the major source of revenue for Georgia’s government. It supplies the bulk of revenues to pay for things like schools, roads, healthcare, and public safety. When you start fooling with that tax, you endanger a state’s ability to provide basic services to its constituents.
There will always be a strong push in some legislative quarters to eliminate the state income tax. Kansas is a stark reminder of how that move can backfire.