Kansas’ Tax Cut Experience Refutes Economic Growth Predictions of Trump Tax Advisors
End Notes
[1] https://www.donaldjtrump.com/positions/economic-vision. Neil Irwin and Alan Rappeport, “Donald Trump Adopts G.O.P. Tax Cuts, but Balks at Trade Pacts,” New York Times, August 8, 2016.
[2] “Stephen Moore: Trump will grow the economy,” Fox News, July 19, 2016, http://video.foxnews.com/v/5042322373001/stephen-moore-trump-will-grow-the-economy/?#sp=show-clips.
[3] Jim Nunns et al., “An Analysis of Donald Trump’s Tax Plan,” Tax Policy Center, December 22, 2015, http://www.taxpolicycenter.org/publications/analysis-donald-trumps-tax-plan/full.
[4] In an August 8 Fox News interview, Moore said that the revisions to the initial Trump plan reduced its revenue loss by approximately two-thirds. He attributed that in part to an “explosive pro-growth element,” the 15 percent top tax rate for all corporate and non-corporate business income. http://video.foxnews.com/v/5076176980001/campaign-adviser-explains-trumps-new-plan-for-tax-brackets/#sp=show-clips.
[5] Patricia Cohen, “Trump’s Economic Team: Bankers and Billionaires (and All Men), New York Times, August 5, 2016; http://www.nytimes.com/2016/08/06/business/economy/donald-trump-economic-team.html.
[6] When asked in an August 5th Bloomberg News interview how the plan could avoid increasing the national debt, Moore replied that the proposed “overhaul of the tax system . . . will be one of the biggest tax cuts since Ronald Reagan. And we know what happened when Ronald Reagan cut taxes, we had a boom in the economy. . . .” http://mms.tveyes.com/MediaCenterPlayer.aspx?u=aHR0cDovL21lZGlhY2VudGVyLnR2ZXllcy5jb20vZG93bmxvYWRnYXRld2F5LmFzcHg%2FVXNlcklEPTMyOTI2MyZNRElEPTY0ODY0NTMmTURTZWVkPTIwOTMmVHlwZT1NZWRpYQ%3D%3D
[7] Doug Sheppard, “Moore and Leachman Debate Kansas Tax Cuts,” State Tax Notes, October 13, 2014, p. 89, https://www.cbpp.org/sites/default/files/atoms/files/Moore-and-Leachman-Debate-Kansas-Tax-Cuts.pdf.
[8] Arthur Laffer and Stephen Moore, “Taxes Really Do Matter: Look at the States,” Laffer Center for Supply-Side Economics, September 2012, p. 17, http://www.laffercenter.com/wp-content/uploads/2012/09/2012-09-TaxesDoMatterLookAtStates-LafferCenter-Laffer-Moore.pdf. Emphasis added.
[9] Arthur B. Laffer, Stephen Moore, and Jonathan Williams, “Rich States, Poor States,” 6th Edition, American Legislative Exchange Council, 2013, p. 3. Emphasis added.
[10] Sheppard, p. 90. Emphasis added.
[11] The source of all three statements is CBPP analysis of Bureau of Labor Statistics and Bureau of Economic Analysis data.
[12] The rest of the years referenced in this set of bullets are fiscal years as well.
[13] Duane Goossen, “Income Tax Cuts Broke the Kansas Budget,” Kansas Center for Economic Growth, July 13, 2016, http://realprosperityks.com/goossen-income-tax-cuts-broke-kansas-budget/.
[14] Goossen.
[15] Kansas Division of the Budget, “Comparison Report, FY 17,” July 20, 2016, p. 12, http://budget.ks.gov/publications/FY2017/FY2017_Comparison_Report--7-20-2016.pdf.
[16] Only in May 2016 did Kansas enact legislation to establish a true “rainy day fund” separate from the General Fund. Given the depletion of the General Fund balance and the ongoing imbalance between revenues and expenditures resulting from the 2012 tax cuts, it is unclear when the state may actually be able to begin depositing meaningful amounts of money into the new rainy day fund. Robert Zahradnik and Steve Bailey, “Kansas Becomes the 47th State to Create a Rainy Day Fund,” Pew Charitable Trusts, May 18, 2016, http://www.pewtrusts.org/en/research-and-analysis/analysis/2016/05/18/kansas-becomes-the-47th-state-to-create-a-rainy-day-fund.
[17] According to a December 2015 article in the Kansas City Star, “From 2011 through the state’s 2017 budget year, transfers labeled ‘extraordinary’ from the highway fund to the general fund or to state agencies are expected to hit $1.4 billion. That’s on top of more than $700 million in transfers in that same period that are labeled ‘ordinary or historically routine’ – for a total of $2.1 billion.” Edward M. Eveld, “Kansas Will Pay the Price for Diverting Money from Highway Fund, Some Lawmakers Say,” Kansas City Star, December 28, 2015, http://www.kansascity.com/news/politics-government/article51972555.html.
[18] Micheal Mahoney, “Kansas Budget Cuts to Put 25 Highway Projects on Hold,” KMBC TV, May 19, 2016, http://www.kmbc.com/news/kansas-budget-cuts-to-put-25-highway-projects-on-hold/39631246.
[19] Bryan Lowry, “S&P Downgrades Kansas Bond Rating; Brownback Pushes Back,” Kansas City Star, August 6, 2014, http://www.kansas.com/news/article1158214.html; S&P Global Ratings, “Kansas Downgraded To ‘AA-‘ From ‘AA’ On Structural Budget Pressures, Drawdowns In Reserve Levels; Outlook Stable,” July 26, 2016, https://www.standardandpoors.com/en_US/web/guest/article/-/view/type/HTML/id/1681942. Standard and Poor’s analyst David Hitchcock stated, “The downgrade reflects what we believe to be structural budget pressures, as reflected by drawdowns in reserve levels to what we consider very low levels during a period of national economic expansion, despite four rounds of midyear adjustments in fiscal 2016.” S&P also stated: “We also view a substantial increase in transfers from Kansas’ transportation fund to pay general fund operations in recent years as an additional sign of budgetary stress.”
[20] Sheppard, p. 93.
[21] Ibid.
[22] Stephen Moore, “What’s the Matter with Paul Krugman? Give Kansas Tax Breaks Time to Work,” Kansas City Star, July 7, 2014, http://www.kansascity.com/opinion/readers-opinion/as-i-see-it/article685284.html.
[23] Deron Lee, “Why One Editor Won’t Run Any More Op-eds by the Heritage Foundation’s Top Economist,” Columbia Journalism Review,” July 31, 2014, http://www.cjr.org/united_states_project/stephen_moore_heritage_foundation_paul_krugman_kansas_city_star.php.
[24] Arthur B. Laffer and Stephen Moore, “Sweet Supply-side Revenge for Tax Cutters in Kansas,” Investor’s Business Daily, February 1, 2016, http://www.investors.com/politics/brain-trust/laffer-and-moore-sweet-supply-side-revenge-for-tax-cutters-in-kansas/.
[25] Yael T. Abouhalkah, “In Defending Gov. Sam Brownback’s Tax Cuts, Two Economists Bungle the Job,” Kansas City Star, February 4, 2016, http://www.kansascity.com/opinion/opn-columns-blogs/yael-t-abouhalkah/article58549653.html.