Rachael Madcow and MSNBC? Seriously?
Tax Cuts of Kansas Already Improving the State s Economy
Tax Cuts of Kansas Already Improving the State’s Economy
...Arthur Laffer, one of the three economists who co-authored
An Inquiry Into the Nature and Causes of the Wealth of States earlier this year, advised Governor Brownback during the crafting of the tax cut bill. In his book, Laffer presents irrefutable evidence that lowering tax rates on small businesses allows more of them to be created, leading to more jobs and stronger economic growth.
This evidence and logic, however, fly in the face of conventional wisdom: that government spending creates jobs and by starving the government, the economy suffers. The cast of fools promoting this nonsense in the national media seized upon a single piece of data — that Kansas state government revenues for the current fiscal year have dropped slightly — to make the case that Kansas was soon going to disappear into a morass of unemployment resulting in massive cutbacks in state services for roads, education, and such. Leading the parade of such Keynesian dreamers was Michael Hiltzik, author of
The Economy Hub for the
Los Angeles Times. He called Kansas a graveyard, thanks to Brownback, Laffer, and those knuckle-dragging tea partiers:
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.”
He decried those tax cuts which “allow everyone from freelancers and petty contractors to huge partnerships to avoid any state income tax at all.” As evidence for the failure of those cuts to work, he pointed to a single piece of data: the report from the Kansas state treasurer’s office that revenues this year have dipped slightly. What Hiltzik failed to mention was that they dipped due to the change in capital gains taxes in 2013 that forced many to sell in 2012 to avoid the higher taxes in 2013. This skewed revenue flow made for an incomplete and inaccurate comparison of revenues to the year before.
He also failed to mention that Kansas Budget Director Shawn Sullivan, on the day of the announcement of the shortfall, said that not only does the state have enough reserves to cover the temporary shortfall, but, "We feel like we’re going to be OK.”
Next in line were the worthies at the
New York Times calling themselves the Editorial Board. It called Brownback’s tax cuts “ruinous” and “spectacularly ill-advised,” and the temporary shortfall proved, to their satisfaction at least, that “states cannot cut their way to prosperity. They need every tool of government to nurture growth, and those tools require money.”
Stephen Moore, the Heritage Foundation’s chief economist and co-author with Laffer of
Inquiry, happily put the matter to rest:
What is irrefutable from the evidence in the states, not just Kansas, is that strategic tax-rate reductions can ignite growth and employment….
Over the past two decades, the nine states without an income tax have had double the population growth and more than double the income growth of states with very high income taxes. These results are statistically significant, which means it is very unlikely they happened by chance.