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Republican Economics Fail Again, Kanasas This Time - 6/9/2017 9:29:31 AM

outlier

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Joined: 10/22/2005
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With seemingly all of the political media focused on James Comey’s testimony
on Capitol Hill, the most interesting policy news of the week may have come
from 1,000 miles away, in Topeka, Kansas.

The Kansas state legislature on Tuesday voted to override Gov. Sam Brownback’s
veto and roll back $1.2 billion of tax cuts over two years. The vote marked a bipartisan
repudiation of what Brownback had described as an “experiment” in a particular brand
of anti-tax fiscal conservatism.

The failure of that experiment has implications beyond Kansas because Brownback’s
approach was meant to be a model for conservatives elsewhere, including in Washington.
(It was drafted with the help of prominent conservative thinkers, including former Ronald
Reagan adviser Arthur Laffer and Heritage Foundation economist Stephen Moore.) Brownback’s
version was particularly radical: He aimed to push personal income taxes to zero and exempted
certain kinds of businesses, known as “pass-through” entities, from taxes entirely. President
Trump’s tax plan doesn’t go as far, but it follows the same basic roadmap of sharply lower taxes
on both individuals and businesses.

Brownback and his supporters predicted that cutting taxes would create jobs and spur
entrepreneurship while boosting government revenue. That isn’t what happened. Kansas’s
economy has performed reasonably well since the first cuts were passed in 2012, but its
neighbors’ economies have done as well if not better; a recent study concluded that the
business tax cuts at the heart of Brownback’s plan had little if any impact on the state’s
economy. Meanwhile, the state’s fiscal condition fell off a cliff: Tax revenue plunged, creating
huge budget shortfalls and leading ratings agencies to downgrade the state’s credit rating.
(emphasis added)

Some conservatives have argued that Brownback’s experiment isn’t a fair test of their economic
theories because Kansas didn’t pair its big tax cuts with equivalent reductions in government spending.
But there’s a reason for that: Members of the public might not like paying taxes, but they do like the
services those taxes pay for. When it looked like Kansas’s budget gap would lead to big cuts to education
and highway spending, voters responded by throwing conservative legislators out of office and replacing
them with the Democrats and moderate Republicans who this week overrode Brownback’s veto. Whether
Republicans in the U.S. Congress learn the economic lessons of the Kansas experiment remains to be seen.
But you can be sure that they’ll be studying the political lessons closely.

https://fivethirtyeight.com/features/the-kansas-experiment-is-bad-news-for-trumps-tax-cuts/

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