The subject here is Kansas headlong dive into supply-side economics. For a quick refresher, here’s how these same economic ideas failed the nation, when it was used for the same experiment (see also here).
So…where are we now….
There was a windstorm of hasty excuses in recent weeks after Kansas reported that it took in $338 million less than expected in the 2014 fiscal year and would have to dip heavily into a reserve fund. Spending wasn’t cut enough, said conservatives. Too many rich people sold off stock in the previous year, state officials said. It’s the price of creating jobs, said Gov. Sam Brownback.
None of those reasons were correct. There was only one reason for the state’s plummeting revenues, and that was the spectacularly ill-advised income tax cuts that Mr. Brownback and his fellow Republicans engineered in 2012 and 2013. The cuts, which largely benefited the wealthy, cost the state 8 percent of the revenue it needs for schools and other government services. As the Center on Budget and Policy Priorities noted, that’s about the same as the effect of a midsize recession. Moody’s cut the state’s debt rating in April for the first time in at least 13 years, citing the cuts and a lack of confidence in the state’s fiscal management.
Gov. Brownback also claimed these massive tax cuts would create jobs. That hasn’t worked out like he said, either.
Using the federal agency’s data, The Star compiled percentages of seasonally adjusted, nonfarm total job growth for Kansas, its four bordering states, a few other Midwestern states, Texas (no income tax), New York (extremely high income tax), and the U.S. average from January 2011 through June 30, 2014.
Texas, 10.5 percent
Colorado, 9.2 percent
Oklahoma, 6.5 percent
U.S. average, 6.1 percent
Iowa, 5.0 percent
New York, 4.8 percent
Missouri, 4.1 percent
Nebraska, 3.8 percent
Kansas, 3.5 percent
Arkansas, 1.9 percent
Kansas has had one of the nation’s poorest rates of employment growth during Brownback’s time in office, including since the first tax cuts took effect in 2013.
Keep in mind that these are actual year-over-year declines in revenues, not shortfalls in projected revenue. And they came at a time when the national economy was recovering (albeit slowly) and most other states were enjoying strong pickups in tax collections.
BTW…can you guess where Koch Industries, the second largest private company in the U.S., is headquartered? C’mon guess.
And guess what one of the big tax cuts Brownback pushed was? C’mon guess.
Let me repeat…this guy, Stephen Moore, had to have his job numbers corrected because he was lying about them. Which leads to the general awareness that they only way conservative math even “works” is WHEN YOU ARE LYING.
California did the exact opposite of Kansas. In 2012, when California was in a dire budget crisis, voters passed a critical ballot initiative undoing the state’s requirement of a two-thirds supermajority vote in the legislature to raise taxes. Through the initiative, California voters passed tax increases for everyone, including the rich, marginally increasing the sales tax while creating new income tax brackets of 10.3 percent for those who earned between $250,000 and $300,000; 11.3 percent for taxpayers who made anywhere between $300,000 and $500,000; 12.3 percent for incomes of $500,000 to $1,000,000; and 13.3 percent for all incomes above $1,000,000. The richest Californians would barely notice it, given the immense wealth in California’s major economic hubs like Silicon Valley, Hollywood, and the wine country.
After monitoring the results, the New Jersey Policy Perspective, a non-partisan think tank, found that California’s tax increases are paying off big time. The state’s coffers will gain approximately $6.8 billion in new revenue every year, all of which will be invested in public education. California saw 2.9 percent job growth in 2013, making it the third fastest-growing economy in the US.