Kansas Governor Sam Brownback said recently that his radical 2012 income tax cuts — among the largest that any state has ever enacted — generated over 15,000 small businesses in Kansas. He’s made this claim before, such as to the New York Times last month. It’s one of his top arguments that the tax cuts have worked.
But it’s misleading, at best.
First, while more than 15,000 new businesses were incorporated in Kansas in 2013, more than 16,000 other businesses were either dissolved by their owners or forfeited for failure to file an annual report and pay the annual fee. Even adding in the 4,500 businesses that owners reinstated that year (by filing annual reports after letting their status lapse), the net growth in registered businesses was about 3,600 — smaller than in 2012, the year before the tax cuts took effect.
More importantly, proponents of the tax cuts said their goal was to create real jobs. But, private sector job growth in Kansas since the tax cuts took effect ranks among the lowest of any state — 46th fastest as of the latest data.
Meanwhile, the tax cuts have led to a big drop in revenue for the state, deep cuts in services, and an overall weakening of the state’s economic prospects.