Saturday, December 27, 2014

Did the GOP Actually Learn From Kansas' Disastrous Tax Cuts?


Outside of the GOP, Kansas Governor Sam Brownback - who came close to losing his reelection bid - is a far right nut case.  But seemingly, even some in the GOP have learned a lesson from Kansas' extreme tax cuts which down graded the state's credit rating and left no money for many essential services and state functions.   How long the lesson will be remembered will remain to be seen.  A piece in Politico looks at the GOP reaction to the "Brownback effect."  Here are highlights:

Ohio Gov. John Kasich will roll out “responsible” tax plans that protect against revenue gaps. Wisconsin Gov. Scott Walker and Arizona’s new Republican governor are delaying big dreams of nixing the income tax as they face budget shortfalls. And Missouri Republicans, once jealous of their neighbor Kansas’ massive cuts, are thankful they trimmed less.

Call it the Brownback effect.

Republicans once idolized Kansas Gov. Sam Brownback as a tax cutting superstar — now he’s a lesson in what not to do.

“It’s a cautionary tale on a national scale … Many of us felt that [Kansas] had been too aggressive,” said Indiana Senate Majority Leader and tax committee chairman Brandt Hershman, who helped GOP Gov. Mike Pence cut corporate taxes last spring. “We all like low taxes … but we have to ensure the stability of a revenue stream to provide basic services that our citizens expect.”
It’s a major turnaround from two years ago, when Brownback was considered a Republican trailblazer for conservatives around the nation who dreamed of phasing out their state income tax.

Now, Republicans are rethinking how aggressive they can be on taxes in light of the projected $279 million revenue gap that’s plaguing Kansas this year — shortfalls that resulted in the state’s credit rating being downgraded and nearly booted the Republican from office in a state that bleeds red.

Although income taxes composed almost half of Kansas’ general fund, Brownback said the cuts would grow the economy and attract new business, so that revenue would spring back quickly, essentially paying for the cuts. He had Reagan-era tax guru Arthur Laffer at his back supporting him.
But his plan didn’t pan out. Revenues are way down, and job growth remains below the national average. His own budget director says they may have to stop some of the tax cuts from going into effect, according to a New York Times interview.

Republicans say they learned another lesson from Brownback: Don’t over promise that tax cuts are going to spur job and revenue growth right away — be realistic.
 

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