Saturday, December 31, 2016

Kansas tax-cut "experiment" fails . . . once again

This is a copy of a blog on Daily Kos by Egberto Willies, which is essentially a summary of a presentation by Chris Hayes on MSNBC about Kansas' "experiment" in tax cut budget "magic" that didn't work.   In fact, it had the opposite effect -- as most of us knew it would.    But Republicans refuse to believe it.   The question is, with the Kansas "experiment' now proving them wrong, will they finally admit they are wrong?
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Chris Hayes used Kansas Governor Sam Brownback's words against him . . . as he tries to sell his failed tax plan to Donald Trump. . . .

"Sam Brownback, the Republican Governor, from Kansas, has some advice for the president-elect," Chris Hayes said. "Telling the Wall Street Journal that Trump should mimic his Kansas tax plan. Brownback's signature idea, eliminating the 4.6% state individual income tax for partnerships, limited liability corporations, and similar businesses.  When Brownback passed his steep income tax cut in 2012, he called it "a real life experiment."

Hayes then played a June 19th, 2012 clip of Brownback saying that on taxes the overall rate needed to come down, removing social manipulations -- read social safety net-- to create growth.

"We'll see how it works," Brownback said. "We will have a real life experiment. We are right next to some other states that haven't lowered taxes. You'll get a chance to see how this impacts a particular experimental area. And I think Kansas is going to do well."

Brownback set a benchmark. Chris Hayes pointed out that it is now beyond three years.

"It would seem logical to take the governor up on his offer," Chris Hayes said. "As economists have reported for years, that economic vision appears to be failing spectacularly in Kansas. The massive tax cut blew a massive hole in the state budget, and now [the] $350 million deficit is expected to grow; the state credit rating has been downgraded twice and falling [revenue has forced] cuts to higher education and Medicaid.

"Brownback used around $2 Billion designated for highway funding to cover the budget hole. Meanwhile, the tax cuts have done little to jumpstart Kansas' economy overall with growth for this year projected to be flat, compared with 2% GDP growth nationally. Today, we got one more economic indicator out of the region. Brownback claimed in 2012 you can measure his Kansas experiment against neighboring states which did not enact the same type of drastic income tax cuts like Nebraska."

Hayes displayed the charts showing Nebraska outperforming Kansas by quite a bit.

"Justin Fox from Bloomberg has been tracking employment growth between Kansas and Nebraska," said Hayes. "Today found that the gap has only grown this year. Kansas is that blue line. It has been stagnant, flat for two years, while Nebraska is pulling away. 

"So, why would Donald Trump follow the advice of the governor whose policies created massive budget deficits, credit downgrades, slowed economic growth and hiring? One possible selling point, the plan would probably be good for people like Donald Trump. As the Washington Post reported on Kansas earlier this year, the poorest 20% of households are now paying an average of about $200 more in state taxes according to an analysis by the Institute on Taxation and Economic Policy. Meanwhile, the wealthiest 1% of households are saving an average of $25,000."

"The Laffer curve is a laugh. Look closely. It is an indirect transfer of wealth from the masses to the few."
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Here's the thing though.   To those who respect facts and empirical data, the answer is obvious.  This just does not work.   But Republicans, in general, for decades have refused to believe anecdotal evidence that it doesn't work.    This goes a bit further.    Gov. Brownback predicted one thing and suggested Kansas be compared with neighboring states that didn't cut taxes.

Well, that's exactly what they've done.   And it shows the opposite of what he predicted from his theory.   The evidence shows that it doesn't work.    So what does he do?   Goes and tries to sell the idea to the president-elect, who has promised massive tax cuts.    So let's see what Trump does in the face of such evidence.


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