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How Tea Party tax cuts are turning Kansas into a smoking ruin
http://www.latimes.com/business/hiltzik/la-fi-mh-kansas-a-smoking-ruin-20140709-column.html
"Sam Brownback, the Republican governor of Kansas, doesn't just believe in whistling past the graveyard--he's willing to stroll past it in full-throated song.
The graveyard is where the economy of Kansas has been buried since 2012, when Brownback and his Republican state legislature enacted a slew of deep tax cuts in a tea party-esque quest for economic "freedom."
"Our new pro-growth tax policy will be like a shot of adrenaline into the heart of the Kansas economy," he promised then. Brownback's tax consultant, the supply-side guru Art Laffer, promised Kansans that the cuts would pay for themselves in supercharged economic growth.
Instead, job growth in Kansas trails the nation. The state's rainy-day fund is dwindling to zero. Month after month, revenue comes in even lower than fiscal officials' most dire expectations.
In the rest of the country, school budgets are finally beginning to recover from the toll of the last recession; in Kansas, they're still falling. Healthcare, assistance for the poor, courts, and other state services are being eviscerated.
Who's benefiting? The rich, including those proud offspring of Wichita, Kan.: the Koch brothers.
Despite all this, Brownback resorted to an op-ed in the Wall Street Journal a few weeks ago to declare that "the early results are impressive." Among other statistics he cited, "In the past year, a record number of small businesses — more than 15,000 — were formed."
Yes, but as shown by the Center on Budget and Policy Priorities, a Washington economic think tank, 16,000 disappeared. And many of those businesses that Brownback crowed about were surely created to take advantage of one of the tax-cut quirks Brownback enacted. This is the elimination of all taxes on partnerships, sole proprietorships, and LLCs that pass through their tax liabilities to their owners. That allows everyone from freelancers and petty contractors to huge partnerships to avoid any state income tax at all, as long as they're organized as a certain type of "small business."
Brownback's policy, and his claims about its outcome, define the term "ideological" -- the imposition of preconceived notions on a contradictory reality.
The record of Kansas since 2012 shows the folly of such draconian cuts in revenue. It's one thing to enact targeted cuts in tax rates during an economic upswing, when such a policy can add fuel to job generation. It's quite another to do so blindly during a slump, when cuts in state services undermine efforts at recovery.
Brownback's tax policy came right out of the conservative playbook. His 2012 package cut the top two personal income tax rates from 6.45% (on income over $60,000) and 6.25% (on income between $30,000 and $60,000) to 4.9%. The rate on income under $30,000 was pared to 3% from 3.5%. Pass-through business income was made fully tax-exempt. The law increased the standard deduction, but also eliminated several tax credits that assisted the poor.
More tax changes were enacted last year. The top rate was cut to 3.9% in stages through 2018. But other cuts were reversed; much of a sales tax reduction was canceled, and the standard deduction was cut back, effectively raising taxes for the middle- and working-class.
In all, as the CBPP documents, the changes will cut the taxes of the wealthiest 1% of Kansans by 2.2%. The poorest 20% of Kansans will see their taxes rise by 1.3%.
The impact on overall state revenue has been devastating. Despite Laffer's prediction, the state ended fiscal 2014 with a shortfall of $338 million.
Brownback continues to promise his citizens that growth is just around the corner. But there's no evidence that the kinds of cuts he promoted have anything to do with genuine economic growth. Indeed, it's likely that preserving the quality of crucial state services is more important. That's a policy pursued in California under Gov. Jerry Brown, who successfully pushed to raise taxes after the recession; the state's job growth since then has left Kansas and the country as a whole in the dust.
"States considering deep tax cuts in hopes of sparking a surge of economic growth should look carefully at Kansas," the CBPP suggested in March. Yes, look carefully -- and run the other way."
"Sam Brownback, the Republican governor of Kansas, doesn't just believe in whistling past the graveyard--he's willing to stroll past it in full-throated song.
The graveyard is where the economy of Kansas has been buried since 2012, when Brownback and his Republican state legislature enacted a slew of deep tax cuts in a tea party-esque quest for economic "freedom."
"Our new pro-growth tax policy will be like a shot of adrenaline into the heart of the Kansas economy," he promised then. Brownback's tax consultant, the supply-side guru Art Laffer, promised Kansans that the cuts would pay for themselves in supercharged economic growth.
Instead, job growth in Kansas trails the nation. The state's rainy-day fund is dwindling to zero. Month after month, revenue comes in even lower than fiscal officials' most dire expectations.
In the rest of the country, school budgets are finally beginning to recover from the toll of the last recession; in Kansas, they're still falling. Healthcare, assistance for the poor, courts, and other state services are being eviscerated.
Who's benefiting? The rich, including those proud offspring of Wichita, Kan.: the Koch brothers.
Despite all this, Brownback resorted to an op-ed in the Wall Street Journal a few weeks ago to declare that "the early results are impressive." Among other statistics he cited, "In the past year, a record number of small businesses — more than 15,000 — were formed."
Yes, but as shown by the Center on Budget and Policy Priorities, a Washington economic think tank, 16,000 disappeared. And many of those businesses that Brownback crowed about were surely created to take advantage of one of the tax-cut quirks Brownback enacted. This is the elimination of all taxes on partnerships, sole proprietorships, and LLCs that pass through their tax liabilities to their owners. That allows everyone from freelancers and petty contractors to huge partnerships to avoid any state income tax at all, as long as they're organized as a certain type of "small business."
Brownback's policy, and his claims about its outcome, define the term "ideological" -- the imposition of preconceived notions on a contradictory reality.
The record of Kansas since 2012 shows the folly of such draconian cuts in revenue. It's one thing to enact targeted cuts in tax rates during an economic upswing, when such a policy can add fuel to job generation. It's quite another to do so blindly during a slump, when cuts in state services undermine efforts at recovery.
Brownback's tax policy came right out of the conservative playbook. His 2012 package cut the top two personal income tax rates from 6.45% (on income over $60,000) and 6.25% (on income between $30,000 and $60,000) to 4.9%. The rate on income under $30,000 was pared to 3% from 3.5%. Pass-through business income was made fully tax-exempt. The law increased the standard deduction, but also eliminated several tax credits that assisted the poor.
More tax changes were enacted last year. The top rate was cut to 3.9% in stages through 2018. But other cuts were reversed; much of a sales tax reduction was canceled, and the standard deduction was cut back, effectively raising taxes for the middle- and working-class.
In all, as the CBPP documents, the changes will cut the taxes of the wealthiest 1% of Kansans by 2.2%. The poorest 20% of Kansans will see their taxes rise by 1.3%.
The impact on overall state revenue has been devastating. Despite Laffer's prediction, the state ended fiscal 2014 with a shortfall of $338 million.
Brownback continues to promise his citizens that growth is just around the corner. But there's no evidence that the kinds of cuts he promoted have anything to do with genuine economic growth. Indeed, it's likely that preserving the quality of crucial state services is more important. That's a policy pursued in California under Gov. Jerry Brown, who successfully pushed to raise taxes after the recession; the state's job growth since then has left Kansas and the country as a whole in the dust.
"States considering deep tax cuts in hopes of sparking a surge of economic growth should look carefully at Kansas," the CBPP suggested in March. Yes, look carefully -- and run the other way."
I'd never heard of Hiltzik, but was surprised to find something printed in the business section of a major newspaper that wasn't rabid pro-business. This was actually a connected link from another article that was also tearing into Brownback for his social values agenda, and I was trying to keep this simple and not stir that other kettle of fish. (While you're researching 'grain of salt' where does 'kettle of fish' come from?)
Running a successful business has always been a mystery to me which is why I've always just collected a paycheck and let someone else get ulcers over putting in a profitable bid. So I don't fault someone for running a business and keeping people employed, it just doesn't make sense to me to raise taxes on people who are struggling to make ends meet while giving even more 'tax incentives' to those who are already up to their ears in the trough. I'm more into results than theory anyway, so if California is able to boost their economy by raising taxes and providing better services while Kansas trails the nation in job growth after lowering taxes on the wealthy, I think it's another reason to question 'trickle down' economics.
Running a successful business has always been a mystery to me which is why I've always just collected a paycheck and let someone else get ulcers over putting in a profitable bid. So I don't fault someone for running a business and keeping people employed, it just doesn't make sense to me to raise taxes on people who are struggling to make ends meet while giving even more 'tax incentives' to those who are already up to their ears in the trough. I'm more into results than theory anyway, so if California is able to boost their economy by raising taxes and providing better services while Kansas trails the nation in job growth after lowering taxes on the wealthy, I think it's another reason to question 'trickle down' economics.
I realize this is a blog by Michael Hiltzik, so I take it with a grain of salt (It just dawned on me, I have no clue where “take it with a grain of salt” comes from nor what it means. Since I’m off today, the weather is ugly, and I’m bored, I’m sure I will soon know).
This is not a cheap shot at you. I’ve read some of his other commentaries and have little respect for Michael Hiltzik.
I’m not sure if I read this wrong or it is just more of his rhetoric, “That allows everyone from freelancers and petty contractors to huge partnerships to avoid any state income tax at all, as long as they're organized as a certain type of "small business." How does this apply to Koch Industries that employees 3,000 in Wichita?
He also conveniently failed to mention, what the loss of 3,000 jobs would do to the economy of Wichita. But by doing that, he would have to give some credit to Koch Industries and we know he is not going to do that.
I’m not a big fan of The Tea Party or The Koch Brothers but I would welcome the 3,000 jobs from Koch Industries here, in a heartbeat.
Wichita
Population-386,552
Under 18 and over 65 –147,276 (38.1%)
Average Workforce Age (18-65)- 239,276
Wichita Unemployment 6% (+-)
Koch Industries employment in Wichita –3,000
This is not a cheap shot at you. I’ve read some of his other commentaries and have little respect for Michael Hiltzik.
I’m not sure if I read this wrong or it is just more of his rhetoric, “That allows everyone from freelancers and petty contractors to huge partnerships to avoid any state income tax at all, as long as they're organized as a certain type of "small business." How does this apply to Koch Industries that employees 3,000 in Wichita?
He also conveniently failed to mention, what the loss of 3,000 jobs would do to the economy of Wichita. But by doing that, he would have to give some credit to Koch Industries and we know he is not going to do that.
I’m not a big fan of The Tea Party or The Koch Brothers but I would welcome the 3,000 jobs from Koch Industries here, in a heartbeat.
Wichita
Population-386,552
Under 18 and over 65 –147,276 (38.1%)
Average Workforce Age (18-65)- 239,276
Wichita Unemployment 6% (+-)
Koch Industries employment in Wichita –3,000
".....Art Laffer, promised Kansans that the cuts would pay for themselves in supercharged economic growth.
Instead, job growth in Kansas trails the nation ...... Who's benefiting? The rich, including those proud offspring of Wichita, Kan.: the Koch brothers....... the changes will cut the taxes of the wealthiest 1% of Kansans by 2.2%. The poorest 20% of Kansans will see their taxes rise by 1.3%......."
Instead, job growth in Kansas trails the nation ...... Who's benefiting? The rich, including those proud offspring of Wichita, Kan.: the Koch brothers....... the changes will cut the taxes of the wealthiest 1% of Kansans by 2.2%. The poorest 20% of Kansans will see their taxes rise by 1.3%......."
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