August 1, 2018

The Kansas lesson: don't do it

Forbes

Since Kansas enacted tax and spending cuts in 2012 and 2013, [Governor Sam] Brownback and his allies have argued that this fiscal potion would generate an explosion of economic growth. It didn’t. Overall growth and job creation in Kansas underperformed both the national economy and neighboring states. From January, 2014 (after both tax cuts passed) to April, 2017, Kansas gained only 28,000 net new non-farm jobs. By contrast, Nebraska, an economically similar state with a much smaller labor force, saw a net increase of 35,000 jobs.

While overall employment barely increased and economic activity was lower than other states, Kansas saw a significant increase in the number of individuals with business income.  The likely reason: That zero tax rate on pass-throughs.

The tax cuts did produce one explosion, however. The state’s budget deficit was expected to hit $280 million this year, despite major spending reductions. Kansas falls well below national averages in a wide range of public services from K-12 education to housing to police and fire protection, according to an analysis by the Urban Institute’s State and Local Finance Initiative. Under order from the state Supreme Court, the legislature has voted to increase funding for public schools by $293 million over the next two years.

The more troubling lesson for Republicans in Congress: While Brownback was reelected in 2014, his popularity has since plummeted and his approval rating now hovers at around 25 percent, second lowest among all sitting governors. And while the GOP enjoyed tremendous national electoral success in 2016, the party lost seats in the Kansas legislature. At least in one deep red state, the Trump formula of big tax and spending cuts is no longer the path to political success.

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