Sunday, June 29, 2014

Giant Kansas Tax Cut Slows Economic Growth


Gov. Sam Brownback of Kansas took to the pages of the Wall Street Journal last month to tout the success of his economic program, particularly several rounds of income tax cuts amounting to the largest in the state's history. "We supported small business by taking away all income taxes on small businesses," Brownback wrote, "allowing them to reinvest in their businesses, creating jobs and growth. ... By giving these companies more money to reinvest in their businesses, we are enabling them to hire more people and invest in needed equipment."
The only problem? That job growth hasn't exactly materialized. In fact, as Josh Barro notes in a must-read over at The Upshot today, job growth in Kansas has actually lagged behind the U.S. average, especially in the years following the first round of Brownback tax cuts in 2012.
Earlier this year, my colleague Niraj Chokshi reported on a Center and Budget Policy Priorities study of Kansas' cuts. In an unusually frank assessment from the nonpartisan think tank, the study's authors concluded that "Kansas is a cautionary tale, not a model. As other states recover from the recent recession and turn toward the future, Kansas’ huge tax cuts have left that state’s schools and other public services stuck in the recession, and declining further — a serious threat to the state’s long-term economic vitality. Meanwhile, promises of immediate economic improvement have utterly failed to materialize."
 It's not just the CBPP that has criticized the Kansas tax cuts. Even the Tax Foundation has criticized the exemption for "pass-through" entities which was copied by John Kasich in Ohio. But this is just the obvious result of Republican policy that coddles folks who have way more than they need, and puts giving away government revenues above funding essential services. To make things worse, the tax cuts were offset by increased sales taxes, which hit regular folks much harder than the well off. Whocouldanode this wouldn't work out well. 

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