With the House and Senate set to take up tax reform with Donald Trump’s White House this fall, the story of Kansas and their dramatic experiment in supply-side tax policy needs to be told and understood. Those who claim that reducing taxes will create economic growth need to be able to answer the following question: Why should we as a country adopt an economic strategy that failed spectacularly in Kansas?
To review, in 2012 Kansas governor Sam Brownback along with the Republican majority in the legislature passed enormous tax cuts for small businesses, a reduction in personal income tax, and the elimination of taxes for a variety of goods and industries. The result, Brownback promised, would be increased disposable income, more jobs, and people moving to Kansas for work and business. “It will pave the way to the creation of tens of thousands of new jobs, bring tens of thousands of people to Kansas, and help make our state the best place in America to start and grow a small business,” Brownback claimed. “It will leave more than a billion dollars in the hands of Kansans. An expanding economy and growing population will directly benefit our schools and local governments.”
After five years, the experiment in reducing taxes on the wealthiest of Kansans failed to increase jobs, increase population, or disposable income.
In a thoroughly researched piece featured in Business Insider, Michael Linden examined all three promises and the results. He further went on to explore economic data from four neighboring states – Oklahoma, Colorado, Nebraska, and Missouri – to determine if Kansas was the victim of regional trends or if the failures Kansas has experienced can be more directly linked to misguided policy.
What Linden found was that while its four neighboring states saw increases in job growth, population, and disposable income, Kansas experienced either declining or sharply weaker results than other states. The failure of the supply-side experiment was so spectacular, in fact, that this spring the Kansas’ Republican legislature voted to restore many of the taxes cut in 2012 as the state faced crushing operating deficits. Brownback vetoed their legislation; enough Republicans banded together and they overrode the veto in a resounding rebuke of a tax-cuts-as-economic-stimulus strategy.
It sounds like a great idea: cut regulations and taxes and let the free market grow the economy. It seems like it should work, but as President Trump and Congressional Republicans team up to try the same experiment on a national scale they have to be prepared to substantively speak to the failures of Sam Brownback and the Kansas experiment.
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