Kansas Voters Rejected Failed GOP Tax-Cut Experiment

Brownback, architect of Kansas' disastrous tax cuts.

Since the days of Ronald Reagan, the Republican Party has pursued the myth that tax cuts "pay for themselves" and result in a surge in the economy.  It's the same myth that Republicans used in arguing to pass their 2017 Trump/GOP give away to the very wealthy and corporations. Now, the deficit has exploded and no promised surge in investment or economic growth has taken place,  Most of the tax give away went to stock by-backs and shareholders who have stockpiled the money.  This same formula was used in Kansas to disastrous results.   In the last election, voters in Kansas did the unbelievable: they elected a Democrat as governor.  A piece in The Hill looks at Kansas voters' rejection of GOP voodoo economics which ought to send a message nationally - especially when millions of taxpayers find themselves unexpectedly owing money to the IRS in April, 2019, thanks to deliberate IRS under withholding guidelines.  Here are article highlights:

Former Kansas Governor Sam Brownback’s failed “red state experiment” has truly come to an end.

In rejecting Republican gubernatorial candidate Kris Kobach, who advocated restoration of the Brownback experiment, Kansas voters on Election Day put the final nail in the coffin of what even Republican leaders had come to see as a disastrous set of tax and spending cuts that ruined the Kansas economy. 

Kansas’s 2018 election should serve as a political lesson to our national leaders, and the experience of Kansas over the past several years should serve as a policy lesson. 

In 2012 and 2013, Republican Gov. Sam Brownback signed into law the largest tax cuts in Kansas history. The top state income tax rate fell by nearly one-third and passthrough taxes that affected mainly relatively wealthy individuals were eliminated. With the decline in revenues came significant spending cuts in numerous areas. 

“Our new pro-growth tax policy,” Brownback predicted, “will be like a shot of adrenaline into the heart of the Kansas economy.” The theory, one that should sound familiar, was that cutting taxes and regulations on the wealthy would lead to greater investment and innovation, new jobs, more rapid economic growth and a stronger middle class.

Brownback also called his plan “a real live experiment.” . . . But experiments can go badly wrong, and unfortunately Kansans were guinea pigs for one of the worst. It soon became clear that the Brownback experiment had failed to deliver on his promises.

Analysis by Menzie Chinn, a professor of public affairs and economics at the University of Wisconsin-Madison, found that after the enactment of the tax cuts, economic growth in Kansas fell well below its pre-Brownback trend and, by the spring of 2017, the rate of job growth in Kansas was not only lower than the rates in most of its neighboring states but less than half of the national average.

Brownback’s experiment was such a failure that his party turned against him. In 2017, the Republican-dominated legislature, overriding the governor’s veto, rolled back the tax cuts.

But some were not convinced, including Kris Kobach, who made a resumption of the Brownback experiment (with even deeper spending cuts) a fundamental part of his platform in the just-ended campaign. The voters of Kansas, however, had had enough, and his advocacy of the tax and spending cuts was critical to his defeat.

The same arguments used to sell the Brownback experiment were used to sell the $1.5 trillion tax cut signed into law by President Trump last year. Most of the benefits of the cuts went to those at the top of the income spectrum.

This is reminiscent of Kansas, where the extensive cuts in everything from education, health care and transportation to agriculture and higher education dragged down the state’s economy while the money that was accruing to the rich wasn’t being used to ramp up investment. 

The reason for the failure of the Brownback experiment, and the likely failure of the Trump tax cuts, is that they didn’t account for the ways that economic inequality today obstructs, distorts and subverts the pathways to economic growth that is strong, stable and broadly shared.

They ignore extensive evidence of what — in fact — drives economic growth and stability and can deliver improvements in living standards.

Instead, they reflect supply-side economics, as trumpeted by Arthur Laffer, who was a paid consultant for the Brownback plan and a volunteer cheerleader for the Trump tax cuts. Laffer’s theory of growth has been a foundation for economic policies since the 1980s.  

There is an alternative explanation for how the economy grows. . . . . It comes from ensuring that economic inequality doesn’t subvert our institutions — undermining our democracy, our government and the way the market works to the benefit of the few at the top of the income and wealth ladders, rather than the majority.

The voters of Kansas learned a bitter lesson and made sure history did not repeat itself. Leaders in Washington need to learn that lesson and look for ways to invest in a strong middle class for sustained and balanced economic growth.

Of course, the GOP will not heed this advice.  It will be up to voters and Democrats to repair the damage.