Tuesday, June 13, 2017

Tax cutting

Robert Reich

In a decisive repudiation of conservative tax-cutting philosophy, Kansas Republicans voted this week to reverse deep tax cuts enacted by Republican Gov. Sam Brownback. The move lays bare the risks for Trump and Washington Republicans in pursuing a similar policy nationally.

With huge Republican majorities, Brownback had pursued deep reductions in tax rates early in his administration, calling them a “real live experiment” in conservative governance.

Here are the results of the experiment:
1. The tax reductions failed to deliver the economic growth Brownback had promised. In fact, since Brownback began cutting taxes in 2012, the pace of economic expansion in Kansas has consistently lagged behind that of the rest of the country. Last year, Kansas’s gross domestic product increased just 0.2 percent, federal data show, compared with 1.6 percent nationally. At the end of 2015, the state was in what many economists would describe as a recession, with the economy shrinking for two quarters in a row.
2. The tax cuts created massive deficits in the state budget. The legislature began this year’s session with the government in a deficit of $350 million, leaving lawmakers mulling more budget cuts.
3. As a result, Kansas hasn't had money for roads and schools.

Last year, the governor pushed back the schedule for 25 construction projects planned around the state, the climax of delays intended to keep more cash on hand. In March, Kansas’s Supreme Court ruled that the lack of funding for public schools violated the state’s constitution, forcing lawmakers to act.

It's no coincidence that the tax-cutting ideas Trump endorsed during the campaign are similar to those enacted in Kansas:

Trump and Brownback had the same economic advisers (Arthur Laffer and Steven Moore). And when Brownback was a U.S. senator, his legislative director was Paul Ryan, now speaker of the House.

Will they ever learn?


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