BEYOND THE NUMBERS
Kansas Learned Its Lesson, But Will Other States?
Kansas’ legislature overrode Governor Brownback’s veto last week and nearly fully undid the massive income tax cuts that it enacted five years ago. A Republican-run legislature overruling a Republican governor over the wisdom of big tax cuts has garnered widespread attention. In other states with legislatures that have seriously considered or enacted their own big tax cuts in recent years, local voices are urging that the Kansas lesson be taken to heart. For example:
In Michigan, where ending the income tax has become an almost perennial legislative proposal, including this year, Stephen Henderson, editor of the Detroit Free Press, wrote:
Maybe we ought to stop experimenting. Maybe we could stop chasing ideological rainbows and deal with reality — both with regard to the money we need to provide services, and the consequences that could befall those who rely on those services if we come up short. It requires a different mind-set, no doubt. But we can all see what’s happening with Kansas’ reckless “experiment.” And we should all agree — we don’t want to be like that.
In Missouri, where the legislature overrode the governor’s veto to enact huge income tax cuts that are expected to take effect next year, David Nicklaus, editor at the St. Louis Post-Dispatch, wrote:
Kansas’ experiment was a disaster for the state’s economy, and lawmakers in Jefferson City and Washington should heed the caution flag that’s been hoisted over the plains.
In North Carolina, another state that enacted enormous income tax cuts — and that tax cut proponents hailed as a success after revenues in Kansas fell — the News and Observer editorialized:
State Republican leaders say the comparison with Kansas’ failed tax-cut strategy isn’t apt. North Carolina, they’ll note, is running a budget surplus. But those extra dollars are only what’s in excess of suppressed spending levels. Any homeowner could generate extra dollars if they chose not to fix the roof, cut their children’s meals in half and didn’t use the heater in the winter.
In Ohio, which exempted the profits of many Ohio businesses from income tax — as Kansas did, to disastrous results — Jim Siegel of the Columbus Dispatch noted that:
…as Ohio lawmakers put the finishing touches on another two-year state budget, an increasing number are saying there’s little evidence to support the optimistic predictions of job creation from what now amounts to a $1.1 billion annual tax break for business owners, including many who employ no one…And now, the state’s revenue, particularly from the income tax, is falling hundreds of millions of dollars short of projections, leading to projected budget cuts in school funding, health care for the poor, prisons and a variety of other areas while numerous businesses are paying no income tax.
And in Georgia, where lawmakers this year tried but failed to change their income tax to a flat rate — a tax cut that would mainly benefit high-income households and slow revenue growth — and where there’s been some appetite for scrapping the income tax altogether, Tom Crawford wrote in the Times-Enterprise:
Like it or not, the state income tax is the major source of revenue for Georgia’s government. It supplies the bulk of revenues to pay for things like schools, roads, healthcare, and public safety. When you start fooling with that tax, you endanger a state’s ability to provide basic services to its constituents.
These states and others would be wise to take a page out of a different book and avoid costly, ineffective tax cuts that undermine the foundations of economic growth and broad prosperity.