May 22, 2015

Kansas proves massive tax cuts don't work

Center on Budget & Policy Priorities - The latest projections from Kansas' nonpartisan Legislative Research Department add to the mounting evidence that Kansas' massive tax cuts won't likely generate an economic surge. Personal incomes will grow more slowly in Kansas than in the nation as a whole this year, next year, and the year after that, the department predicts.

Kansas' Own Projections Show State Lagging Behind US

This isn't what tax-cut proponents predicted. Three years ago this month, when Governor Sam Brownback signed the tax cuts into law, he said they would provide "a shot of adrenaline into the heart of the Kansas economy." Economist Art Laffer, who helped design the tax cuts, said they would provide an "immediate and lasting boost" to the state's economy.

But Kansas job growth has been weak, and the tax cuts have blown a hole in the state budget. Huge revenue losses have forced even more cuts in funding for schools and other building blocks of a strong future economy -- on top of the damage done by the Great Recession -- and persuaded the legislature to debate scaling back a major part of the tax-cut package.

The tax cuts' failure so far shouldn't be a surprise. History suggests that deep cuts in personal income taxes are a poor strategy for economic growth, and the serious academic literature typically finds little relationship between a state's tax levels and its economic performance. So there's no reason to think that the tax cuts will cause Kansas' economy to boom in the future

1 comment:

greg gerritt said...

What is even funnier is that one of the best studies showing that tax cuts do nothing was done by the state economic development corporation in Kansas. I also think the agency was shut down since it produced that study, probably falling to budget cuts.

My blog ProsperityForRI.com has several articles about the report, but unfortunately the study itself is no longer on the web.