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Kansas Projections Show Tax Cuts Not Causing Economic Boom

The latest projections from Kansas’ nonpartisan Legislative Research Department add to the mounting evidence that Kansas’ massive tax cuts won’t likely generate an economic surge. Personal incomes will grow more slowly in Kansas than in the nation as a whole this year, next year, and the year after that, the department predicts (see graph).

This isn’t what tax-cut proponents predicted.  Three years ago this month, when Governor Sam Brownback signed the tax cuts into law, he said they would provide “a shot of adrenaline into the heart of the Kansas economy.”  Economist Art Laffer, who helped design the tax cuts, said they would provide an “immediate and lasting boost” to the state’s economy.

But Kansas job growth has been weak, and the tax cuts have blown a hole in the state budget.  Huge revenue losses have forced even more cuts in funding for schools and other building blocks of a strong future economy — on top of the damage done by the Great Recession — and persuaded the legislature to debate scaling back a major part of the tax-cut package.

The tax cuts’ failure so far shouldn’t be a surprise. History suggests that deep cuts in personal income taxes are a poor strategy for economic growth, and the serious academic literature typically finds little relationship between a state’s tax levels and its economic performance.  So there’s no reason to think that the tax cuts will cause Kansas’ economy to boom in the future.