This morning on MSNBC, there was an interesting update from Melissa Harris-Perry about Kansas Gov. Sam Brownback’s ‘experiment’ in reducing state income taxes and how it failed. Does lowering taxes help the economy? Not in Kansas it turns out. Take a listen.
Video ~4:05 (link)
For those who can’t watch here is a written version of events From Politico¹ (excerpts):
Kansas Gov. Sam Brownback, whose massive tax cuts became a cause célèbre for conservatives but threw his state’s budget into disarray, announced Friday that he would pursue tax increases.
In a stark turnaround, the Republican called for higher taxes on cigarettes and liquor as part of his annual budget while proposing to make future tax cuts contingent on revenue projections.
“My budget proposal recognizes that the current budget trajectory is unsustainable and that difficult solutions are required by state law as well as by fiscal prudence,” Brownback said in releasing his two-year budget.
But he said this week that he would stick with his plans to phase out the state’s income tax. “We will continue our march to zero income taxes,” the governor said Thursday in his State of the State address. “States with no income tax consistently grow faster than those with high income taxes.”
By most measures, Brownback’s tax cuts were historic.
He and the GOP legislature slashed personal income tax rates by 25 percent, with the biggest proportional cuts going to the wealthy. They also nixed all taxes for businesses organized as so-called pass-through entities — which can encompass mom-and-pop stores but also big law firms and other businesses that chose to organize that way.
Then came shortfalls, a credit downgrade from Moody’s and a revolt among moderate Kansas Republicans that nearly cost him his job in an unexpectedly tight race last fall.
The 2012 changes decreased tax rates for the highest earners from 6.45 percent to 4.9 percent, with the goal of dropping them to 3.9 percent in 2018. Brownback is now proposing to keep the 2015 rates at 4.6 percent and 2.7 percent, depending on income level, and to make further cuts only if revenues exceed the prior year by 103 percent.
His budget would boost general tax revenues from $5.8 billion in fiscal 2015 to $5.97 billion in 2016 and $6.11 billion in 2017. Consumption taxes would rise from zero in 2015 to $108 million and $104 million in fiscal years 2016 and 2017, respectively.
So do you think Gov Brownback is changing course because of the failed experiment? Yes and No. He admits that the tax cuts he imposed have put his state in disarray, but he won’t reverse the phase out of the state’s income tax. Instead he imposes a higher sales tax on cigarettes and liquor.
His cuts were way to drastic. Now consumption taxes will be used to pay for state expenditures, but don’t think he is going to stop at just cigarettes and liquor. When consumption of cigarettes and liquor go down because of the increase in price, he will need to find something else to tax. Does the state of Kansas have to hit rock bottom before the conservatives admit that lowering taxes so drastically is not just unsustainable, but actually detrimental to the residents of the state? Maybe that is their real intent?
The conservative agenda is proving itself to be inadequate and fiscally irresponsible at all levels of government, yet people still vote these politicians back into office. When will citizens realize that there is no free ride in life and someone has to pay for the state to function? The only question is who pays? Who is expected to pay their fair share? Should individuals carry the burden or does business have a responsibility also? Are you willing to pay more so that business pays less? I’m not. My hope is that the Michigan State Legislature and Gov Snyder will learn from Brownback’s mistake and not go down this road so drastically….but I won’t hold my breath. Remember when the Michigan legislature refused to allocate funds to fix our roads (which was a no brainer)? Resident’s pleas from both sides of the aisle were ignored. Conservative theory and doctrine dictating lower taxes was all that mattered. Remember that the next time you are in the voting booth.
¹Kim Dixon and Brian Faler, “Sam Brownback reverses course, proposes new taxes“. Politico, January 16, 2015.