Archive for Wednesday, May 30, 2012

Research group says Brownback’s business tax cut will produce problems

May 30, 2012


— A national tax research group that is generally thought of as conservative and business-friendly said on Wednesday that Gov. Sam Brownback's elimination of taxes for many business owners has problems

The Tax Foundation supported the part of the tax reform legislation signed into law by Brownback that cut the individual income tax rates of 6.45 percent, 6.25 percent and 3.5 percent to just two rates at 4.9 percent and 3 percent.

But the Washington D.C.-based group didn't support the part of the law that exempts from taxes certain business owners' profits.

“A pass-through business owner typically pays themself a salary, which is taxed as wage income on their income tax return,” said Tax Foundation economist Mark Robyn. “Additional profit above and beyond the business’s cost of doing business is reported as one of several forms of business income on the business owner’s tax return and also taxed under the personal income tax. The new Kansas law would make this non-wage income exempt from taxation,” Robyn said.

Brownback has said the change will stimulate the economy like an adrenaline shot to the heart. He said that the tax cuts will create 22,900 new jobs, give $2 billion more in disposable income to Kansans and increase population by 35,740, in addition to normal population growth.

The tax cuts, Brownback said, will "help make Kansas the best place in America to start and grow a small business."

But the Tax Foundation said "we see a few problems with the small business provisions."

The tax exemption will create an incentive for businesses to structure as pass-throughs for tax purposes, the report said.

"Instead of the Kansas tax system treating similar activity similarly, the system will encourage economically inefficient, though tax-reducing, activities.

"While this can be difficult and complicated, especially in business taxation, Kansas’s decision to exempt one type of business structure completely from taxation (pass-throughs) while continuing to tax others (C corporations) is problematic. It rewards certain business structures while punishing others. There is no sound economic justification for treating these two types of business activity so dramatically differently," the report said.

And the report concludes that while tax reductions can have positive economic benefits "they will cost revenue and will ultimately have to be paid for either by cutting spending or increasing taxes elsewhere."

Legislative staff research have reported that the tax cuts will produce a budget deficit in the $2.5 billion range within six years. Brownback has disputed this will happen.


JackMcKee 5 years, 12 months ago

No, wait, Dave Trabert says this is wrong. There is a secret $600 hidden pot of gold buried under the capital that was put there just for these tax cuts by the Kochs. You won't feel a thing, Kansas, Dave promises.

chootspa 5 years, 12 months ago

The Tax Foundation is a Koch-funded group. I'm floored that even they say this is a bad idea. That's saying something.

Bruce Bertsch 5 years, 12 months ago

I notice no one seems to realize that Koch Industries is organized as an "S" Corp and thus just had their corporate taxes eliminated. Welcome to Brownbackistan.

Jonathan Becker 5 years, 12 months ago

The deficits.

Sam says there won't be any deficits. So there you have it. No need to worry, Sam has got it under kontrolle.

Sam reminds me of the wonderful character played by the late Richard Mulligan on Soap, who believed if he snapped his fingers and waved his arms, he was invisible. Sam is trying out for Richard Mulligan's part.

chootspa 5 years, 12 months ago

Well, technically he's correct. It won't lead to deficits. It will lead to either wholesale defunding of state service or the shifting of the tax burden into skyrocketing property taxes.

Hooligan_016 5 years, 12 months ago

"Legislative staff research have reported that the tax cuts will produce a budget deficit in the $2.5 billion range within six years. Brownback has disputed this will happen."

Right, Brownback's assurance it won't be an issue is because he'll "take care of it."

We are screwed.

Hooligan_016 5 years, 12 months ago

Sorry, got my quote wrong, referring to the bill, he said he could "make it work."

Catalano 5 years, 12 months ago

Actually, the "morons" most likely let ALEC do the heavy lifting.

Mandie Eutsler 5 years, 11 months ago

Calm down Francis! Don't fret, I'm sure that was a joke. Clearly a wind up post, put on your thinking cap. As for you Common sense, shouldn't we call it "rare sense", since nobody seems to have this "common sense"?

WilburNether 5 years, 11 months ago

Ah, the plains are alive with the sound of squealing of little piggies who feed on other people's money at the public trough! The little piggies are not happy that the flow of other people's money to them might be curbed. Squeal, piggies, squeal, just like your counterparts in Greece!

burnmu 5 years, 11 months ago

isn't wilbur the name of the pig in charlotte's web? sounds like the pot calling the kettle black. by the way, equality doesn't equal freebie's you simpleton, it means we all should receive the same taxation, not those that line the pockets of sam brownback

tolawdjk 5 years, 12 months ago

""There is no sound economic justification for treating these two types of business activity so dramatically differently," the report said."

That is because it was done for purely politcal reasons.

yourworstnightmare 5 years, 12 months ago

These tax cuts will bankrupt the state and lead to massive budget cuts to education, social services, and transportation.

Brownback promises a "shot of adrenalin to the economy". We will see soon enough.

I predict large cuts to education and social services and/or large increases in sales and property taxes.

Welcome to Brownbackistan indeed! Brownbackistan. Ackbasswardistan.

Centerville 5 years, 12 months ago

Why is it that these are "Brownback's tax cuts", when they originated in the Senate and were affirmed by the House?

JackMcKee 5 years, 12 months ago

And the hand washing begins. This is Brownback's baby, succeed or fail. It was developed by his secret tax committee, chaired by Art Laffer. Brownback misled the suckers in the Senate into passing the bill under the false pretense that it would be a starting point for negotiations. Sam the Sham then pulled a fast one and signed the bill before anyone could blink. No. this is 100% Brownback's baby.

jafs 5 years, 12 months ago

I'm still having trouble understanding why the Senate would pass it, even with those assurances.

Generally, you start with more than you want, and then make concessions, when negotiating - why start by passing a bill that you don't like?

JackMcKee 5 years, 12 months ago

you have a point, the Senate is usually where the gown ups act seriously and handle things in an intelligent matter. I'm guessing the poisonous environment Brownback and his clan created in Topeka was largely responsible for tossing the potato to the House, who were more than happy to send it Brownback's desk.

chootspa 5 years, 11 months ago

They were completely stupid. Agreed. I think it had something to do with an inside baseball rule of some sort where they needed to have something at the table before they could negotiate and they didn't have time for amendments. I don't understand it at all. I thought they were working on something with property tax relief instead of changing income tax.

chootspa 5 years, 11 months ago

Because he tricked both chambers into passing it and then signed it when the senate moderates were feeling betrayed and urging a veto. HIs baby, 100%.

jafs 5 years, 11 months ago

Except they fell for it.

Falling for a trick like that involves some responsibility, especially when there's reason to distrust the person trying to trick you.

chootspa 5 years, 11 months ago

While I don't hold them blameless for ever trusting the snake, he was still a member of their party and should have been negotiating in good faith. It's still Brownback's baby. He tricked them. He signed it. He gets to take all the credit and blame.

Greg Cooper 5 years, 11 months ago

Brownback is not a member of the Republican party, except in name. He is a member of ALEC, of Koch, of anything that advocates for the suppression of good sense and fair dealing.

I don't bemoan the wealthy their success. I bemoan the political atmosphere that makes it more and more difficult, not only to keep up with a standard of living, but to climb the rungs of poverty to emerge from it.

Practically nothing Brownback has done or advocated has had a thing to do with the welfare of the greatest number of Kansans, jsut those with the greatest wealth. Sad and shameful.

jafs 5 years, 11 months ago

If' they're not "blameless" for trusting him, then he doesn't get "all...the blame".

vimana 5 years, 12 months ago

"Instead of the Kansas tax system treating similar activity similarly, the system will encourage economically inefficient, though tax-reducing, activities."

what a sentence

chootspa 5 years, 11 months ago

Not until they make sociopathy a felony.

Alyosha 5 years, 11 months ago

Another useless comment that adds nothing serious to the discussion. If you are interested in sound public policy, why not add something of value to the discussion instead of a bizarre non sequitur about grilled meat?

It's a shame to see any citizen so disrespectful of their own civic participation that all they can muster is a strange reference to grilled meat. Surely this takes the cake for ridiculous, off topic, unhelpful comment of the day.

If you are a citizen, try to be more serious and civic minded. Otherwise why bother and why waste fellow citizens' time?

Richard Heckler 5 years, 12 months ago

David Cay Johnston a tax expert formerly with the New York times said most elected officials do not understand taxation. Sam Brownback and his cronies appeared to have substantiated the David Cay Johnston position. Johnston BTW is a republican.

The Tax Foundation may well be thinking along those same lines. Kansas should be filing bankruptcy in the near future. Hopefully Sam Brownback will be indicted for fraud.

Alyosha 5 years, 11 months ago

Those who lack civic virtue or an interest in sound public policy and the general good of the commonweal again post useless comments that do nothing but waste space in a database.

Surely you have more self respect than is evidenced in your comment, rockchalk1977; this comment adds nothing to the discussion and only demonstrates your inability to engage with the topic and fact that a Koch-funded foundation has problems with the tax cuts.

If you have nothing to add beyond what is essentially "na na na na i can't hear you" with your fingers stuck in your ears, don't bother or waste others time. And seriously: why not take yourself and these issues more seriously and give yourself the respect you deserve.

Flap Doodle 5 years, 11 months ago

A habit obscene and unsavory Holds David Cay Johnson in slavery With lecherous howls He devours young owls That he keeps in an underground aviary

4getabouit 5 years, 12 months ago

Our boy Sammy is just getting started. Wait until he succeeds in rousting the moderates. Then the "real" revolution will start. In the end, Sam's ideas will fail. Unfortunately, a once robust and moderate State will be badly injured. "Sammy the Koch" will slink into solitude, forever blaming someone else. A loser who cares only about himself and his wealthy benefactors.

Greg Cooper 5 years, 12 months ago

I agree wholeheartedly with your sentiment, but, an I hope I am wrong, the real culprits are the voters who will probably support him and his thugs in the next election.

Kansas is in a whole lot of trouble, but the "conservatives" in the state, I fear, still don't have a clue as to what is going on. They still believe the lies he told and the "explanations" he gives to justify his suicidal plunge into insolvency.

If we, as voters, do not stop this nightmare, we all will be negatively impacted by the current trend. And that includes all of us: wealthy, poor, marginal. None of us can escape and still live in Kansas.

Will you, voters of Kansas, make your voices heard? I sincerely hope so, otherwise we are lost.

jafs 5 years, 11 months ago

There's some hope, in that a number of people who voted for him are upset with what he's doing, and wouldn't vote for him again.

The real question is what the other choices will be, and when we'll have them - it'll be hard for many R folks to vote for D, even if they don't love the R candidates.

Maybe we'll have some moderate R candidates they can vote for, which would be good.

chootspa 5 years, 11 months ago

It's really hard to unseat an incumbent. Either he doesn't run for another term (because he's running for prez) or he gets primaried. I'd be happy with either outcome.

Catalano 5 years, 12 months ago

"Brownback has said the change will stimulate the economy like an adrenaline shot to the heart. He said that the tax cuts will create 22,900 new jobs, give $2 billion more in disposable income to Kansans and increase population by 35,740, in addition to normal population growth."

Apparently, Brownback did not get the memo on Kansas' "normal population growth": "A decades-long decline in population is likely to continue in Kansas, particularly in the west of the state, and four counties could have fewer than 1,000 residents by 2040, according to a study by Wichita State University's Center for Economic Development and Business Research."

Tracy Rogers 5 years, 11 months ago

Kansas population in 2000 = 2,688,418 Kansas population in 2010 = 2,853,118 Kansas population in 2011 = 2,871,238

hujiko 5 years, 11 months ago

Except that's representative of the entire state, not just Western Kansas. Rural areas have experienced a stark decline in population ever since the post-war agricultural revolution of the 1950-60s, when the percent of population in urban areas first exceeded that of rural ones. Of course there were many other factors leading to rural flight, but technological advances that eliminated the need for human labor signaled the death knell of the classic family farm era.

Population data is useless without the spatial component.

JackMcKee 5 years, 12 months ago

If you can't trust Dave Trabert, who can you trust?

JayhawkFan1985 5 years, 12 months ago

This tax cut will be less like adreniline to the heart and more like methamphetimine to the brain...

gravitykills 5 years, 12 months ago

I agree with the tax cuts, but I'm struggling with why brownback supported pass through businesses coming into Kansas. Was this his intent? If so, what (if any) benefit would this have?

Jonathan Becker 5 years, 11 months ago

The pass through entities would have to pay the $55 annual registration fee. We only need 45,454,455 companies register to offset the $2.5 billion projected deficit. That is only 17 corporations/partnerships/trust per Kansan.

Alyosha 5 years, 11 months ago

This comment makes no sense in terms of what the foundation has to say about changes to Kansas' tax policies. On its face the comment is without merit or seriousness and lacks anything a reasonable person could describe as sense or meaning. The bizarre quote use only demonstrates that the commenter is a writer who cannot communicate in a standard manner in the language one presumes the writer has lived in their entire life. What a shame.

Falsehope, why not take yourself more seriously and show yourself more respect by actually engaging in the issues presented by the foundation's take on the tax law changes?

Otherwise you are simply showing yourself to be incapable of serious civic engagement, and a serious discussion is not the place for you to be. Perhaps performing as a clown at childrens' birthday parties would better fit your skillset as demonstrated in your comments.

Crazy_Larry 5 years, 11 months ago

He's only doing his job as a sock-puppet. Distract everyone from the truth and divide them with lies... Koch Industries pays him well to do this.

JackMcKee 5 years, 11 months ago

It's not just businesses, it's also investment assets in trusts and other pass through entities. So if you have interest income and your just a typical average Joe you're going to pay income taxes on your interest but if it's in a trust it will be tax free. Same type of income, different treatment based on the type of entity that hold the property.

HelenaBertinelli 5 years, 11 months ago

Come on now people. This man was elected Governor of this great state. Surely he must be working only to do what is best for those who elected him. So if Brownback says these tax breaks won't cause a deficit, then we have to trust him on that one. We elected him, not these 'tax research groups.' So it is him we must put our trust in. Now who else is up for voting to officially change the name of the state to Brownbackistan? In Brownback's name, Amen.

Orwell 5 years, 11 months ago

Right. We should all ignore competent, independent forecasts of difficulty for the state because they might not be "balanced."

And where were the pro-tornado articles after Greensburg? Talk about one-sided…

Alyosha 5 years, 11 months ago

You apparently forget that the Journal-World endorsed Brownback for Governor.

And who do you mean when you say "you people"? In general, when a writer can't provide specifics in their claims, it's a very good sign that they have not well thought out the point they are trying to make.

You also seriously misunderstand the nature of journalism. When a story details and quotes a third party (in this case The Tax Foundation) perspective on a newsworthy topic (the tax changes), it's a misunderstanding to believe that the story is evidencing the publisher's point of view.

You also seem to have missed the part in the story where The Tax Foundation is described as "support[ing] the part of the tax reform legislation signed into law by Brownback that cut the individual income tax rates of 6.45 percent, 6.25 percent and 3.5 percent to just two rates at 4.9 percent and 3 percent."

Your claims are without merit since you clearly miss a basic part of the story that directly contradict your point.

Lastly, the of the paper has a hyphen, fyi: if you can't get a simple detail like that right in your comment, readers will with reason believe your other assumptions and claims are likely to be without much careful thinking behind them too.

Try again, or perhaps you shouldn't waste your or other people's time by posting comments that are wholly without seriousness or merit.

jafs 5 years, 11 months ago

Your claim that anybody who isn't in government doesn't "have a clue" is false.

As is your claim that this is a "liberal" newspaper.

The owner of the J-W is well known to be conservative.

Cait McKnelly 5 years, 11 months ago Ganked from Scott Rothschild's Twitter: The new tax cut laws will be presented as evidence by the plaintiff in the education funding class action lawsuit currently up before the state Supreme Court.

Dave Trabert 5 years, 11 months ago

KPI agrees with the Tax Foundation's policy position, saying that tax reform ideally should apply uniformly to all taxpayer groups. Here's an excerpt of our testimony on the Governor's tax plan submitted on February 8, 2012.

"We fully support the reduction of marginal tax rates for all taxpayers and the eventual elimination of the state income tax. We also circumstantially support the concept of not taxing non-wage income of business such as sole proprietorships, LLCs and sub-S corporations that are taxed under Individual tax rates. We believe current economic and long-term budgetary conditions necessitate taking the bold step of exempting non-wage income of such entities from income tax. Under more favorable economic conditions we would prefer to see this phased in over several years to allow for greater immediate reduction in marginal income tax rates for individuals and corporations.

We disagree, however, with increasing the income tax liability of a certain class of taxpayers while other taxpayers receive a reduction in their tax liability. 2009 simulations released by the Department of Revenue show that taxpayers with Adjusted Gross Income below $25,000 would have seen a net increase in their tax liability of $88.2 million, while those earning more than $25,000 would see net reductions in their liability."

Tax reform will require adjustments in spending but concerns that core services will be eliminated, property taxes will skyrocket or that schools will be de-funded are overblown. States with lower tax burdens, including those with no income tax, all provide social services, highways and schools...they just do so more efficiently.

The most recent comparison from the National Association of State Budget Officers for 2010 showed that Kansas spent 32% more per-resident than the states with no income tax (all state spending, excluding federal dollars and spending from the sale of bonds). Had Kansas spent at their average amount per-resident, we would have spent $2.2 billion less.

Increasing efficiency by just 6.5% in the General Fund would allow small spending growth each year based on revenue projections from legislative research and still have a small positive ending balance.

Tax reform is about job creation and efficient, effective government.

Private sector employment in the Lawrence Metro is a good example of how past tax-and-spend policies at the state and local level have harmed Kansas. According to the Bureau of Labor Statistics (average annual employment, not seasonally adjusted), the Lawrence Metro had the same number of private sector jobs in 2011 as in 1998. By comparison, the State of Kansas was up just 0.3%, neighboring states averaged a 3.1% increase (Missouri was down but Nebraska, Colorado and Oklahoma were up more than 6%. Texas increased by 17.5%. But the Lawrence Metro did enjoy 17% job growth in Government.

JackMcKee 5 years, 11 months ago

Dave Trabert's answer to the dumbest gamble in Kansas' history: double down.

Dave Trabert 5 years, 11 months ago

Jack, if you would like to organize a public discussion of this issue I would be happy to participate. There are many good questions to be discussed and some type of open forum is the best way for people to get more information.

JackMcKee 5 years, 11 months ago

The Lawrence Metro? You're not from around here, are you Dave. The problem with Lawrence has never been taxes, Dave, it's been an unwillingness to work with employers and a general anti-development attitude, see, e.g., American Eagle Outfitters.

Strip away the talking points that are handed to you by the Kochs and what do you really have left, Dave? Not much.

JackMcKee 5 years, 11 months ago

besides that, most people in Lawrence chose to live here despite the highest property values and taxes in the state, which belies your master's claim about taxes influencing where people choose to live. People live here because of Lawrence's quality of life and insulation from the far right in the rest of the state.

But there's no reason to debate the obvious with you. In 2 years when the people aren't flocking to Kansas and the jobs haven't materialized we'll know where to find you and AFP and ALEC to have a nice discussion about stupidity.

JackMcKee 5 years, 11 months ago

unlike Wichita, where young people can't get away fast enough. Where, by the way, Boeing just left with a few thousand jobs after very clearly stating that your tax scheme did not entice them to stick around at all.

chootspa 5 years, 11 months ago

They moved those jobs to a location with much higher taxes. Doh.

chootspa 5 years, 11 months ago

Also call apples oranges. States without income taxes are apparently all the same, and there's no variable that say Alaska, Texas, or Florida has that Kansas doesn't - other than income tax.

chootspa 5 years, 11 months ago

What a coincidence. Dave Trabert's group is funded by the Kochs. The Tax Foundation is funded by the Kochs. And they both have the same position (or at least Dave spins it as such). How much do you want to bet that it's the same position as held by the Kochs?

jayhawklawrence 5 years, 11 months ago

I think anyone who is interested in analyzing the job increases in Texas has not been impressed. I think this rhetorical argument has gone by the wayside along with the Rick Perry campaign for President which was the most hyped event since the McCain/Palin fiasco. The "Rick Perry" miracle turned out to be nothing but hot air.

Since Mr. Trabert does not seem to actually believe much in taxes, I would be more interested in his ideas about exactly what we are going to keep in the future conservative utopia.

My belief is that Trabert and the front groups working to end taxes and deregulate industries are not interested in better government as much as they are interested in producing big payoffs for their clients.

just_another_bozo_on_this_bus 5 years, 11 months ago

Translation-- the rich say we're broke, so the poor and the middle class must pay.

Bob_Keeshan 5 years, 11 months ago

Trabert -- this is a public discussion. And you're failing miserably as you continue to cherry-pick numbers and apply them globally.

Here's a number -- Kansas had fewer private sector jobs in 2003 than in 1998, following the largest tax cut in Kansas history and large spending reductions. After a tax increase went into effect midway through 2002, Kansas enjoyed large private sector job growth from 2003 to 2008.

Why do Trabert and AFP and all of his Koch-funded allies keep using 1998? Apparently to invite criticism that it was the previous largest tax cut in Kansas history, passed in 1998, that caused private sector job growth to fall between 1998 and 2003.

JackMcKee 5 years, 11 months ago

That's because Dave is not here as a member of the public, he's here as a paid Koch shill.

Cant_have_it_both_ways 5 years, 11 months ago

You can commission a study for any desired outcome, then sell it as fact. Do this long enough and it tends to stick.

tolawdjk 5 years, 11 months ago

And yet the only one selling a study that agrees with the gov is the study done by the govs own people.

Doesn't matter now though. He has to make it work. If it doesn't work he can't even use the convient excuse that the "feds" got in the way. Cause his rosy project was based on this working miracles in any environment.

Kansas "will" experience levels of growth unprecidented in its history. And it doesn't even have to count on cuts in spending, because the growth will cover that.

If one item is cut, his plan will be a failure. I'm not setting these conditions, he did in selling this plan. Next three months should see strong economic growth, particularly in the construction sector as businesses move in develop property to handle thier new facilities. Unemployment numbers should increase at rates faster than national averages. County budget offices should be able to spend a bit more as more tax revenue comes in to pay for defered maintenance.

One thing I haven't looked at does this effect the Govs previous "Move to Rural Kansas" tax plan? Doesn't it at least partially throw it under the bus?

Dave Trabert 5 years, 11 months ago

Your false claim about large revenue and spending reductions in the late 90s is a perfect example of why a real public forum on these issues is necessary.

According to annual editions of the Governor's Budget Report, General Fund spending increased every year since 1991 (that's as far back as I looked) except for recession-related reductions in 2003, 2009 and 2010. General Fund revenues increased every year throughout the 90s except for a 1.1% decline in FY 1999, which came on the heels of a 16% increase over the previous two years and was followed by annual increases until a recession-related drop of 6.9% in 2002.

Your job numbers are also not supported by facts. According to the Bureau of Labor Statistics, private sector jobs (average annual employment, seasonally adjusted) went into a recession-driven decline in December 2000 and didn't hit bottom until July 2003. The private sector job growth over the next 6 years was merely replacing jobs lost during the recession. 2008 employment was only 2.7% ahead of 2000 employment. As employment recovered, so did revenues.

We went back to 1998 for our initial analysis on job growth because private sector employment peaked in 2008 and we wanted a 10-year look back. We've continually updated the data each year since.

Why do you and others so strongly resist having these discussion in front of others?

JackMcKee 5 years, 11 months ago

How many people work on these talking points, Dave ?

JackMcKee 5 years, 11 months ago

what was the cost to come up with facts in that comment? How man hours of staff time were devoted to coming up with those "facts".

chootspa 5 years, 11 months ago

This is a public forum, and you can post in the comfort of Koch headquarters without having to smell the stench of our taxpayer-subsidized public transportation fumes. Asynchronous discussions are the most convenient mode of public discourse for us still taxpaying citizens during our busy lives of earning tax-free profits for our job providers.

Bob_Keeshan 5 years, 11 months ago

Trabert -- you realize you just accused me of making a false claim, then presented statistics backing up my claim, right?

My claim -- big tax cuts in 1998. Your statistics -- revenues declined in 1999.

My claim -- big spending cuts prior to 2003. Your statistics -- spending was reduced in 2003.

By the way, this is an open and public forum. You should be glad there isn't an audience, as it protects you from people laughing when you embarrass yourself over and over and over again, such as attacking my claim as false and then proving that it is, in fact, accurate. Thanks!

chootspa 5 years, 11 months ago

He'd get mic-checked at a public forum, anyway. At least this way we we can read what he has to say.

JackMcKee 5 years, 11 months ago

Dave, tell me more about the $650 million hidden in the budget that's going to offset part of this tax cut.

Jayhawk1958 5 years, 11 months ago

Brownback-Turning back the clock 100 years in Kansas.

Randall Uhrich 5 years, 11 months ago

Brownback's fiscal irresponsibility is an impeacheable offense! Let's get started.

tbaker 5 years, 11 months ago

"Legislative staff research have reported that the tax cuts will produce a budget deficit in the $2.5 billion range within six years. Brownback has disputed this will happen."

So lets wait and see. Regardless of what happens, we all have the ballot box.

If fiscal irresponsibility was an impeachable offense, we would have to get started on a lot more politicians besides just the governor.

Of course this thinking proceeds on the tired old flawed assumption that letting people keep more of what they worked for and earned is not as good an idea of government taking the money from them and deciding how to spend it. This begs some questions:

Are all the things government currently spends money on utterly essential?

Isn’t the natural state of government to grow and expand? Didn’t the founders warn of us of this? Must it always grow in size and scope, or can is be forced to shrink from time to time?

Is government spending money on things outside the scope of constitutional authority?

Are we getting our money’s worth from everything government spends our tax money on? Is it being done better, faster, and cheaper than the private sector? Is there no fraud waste or abuse in government spending going on?

What is the economic impact of taking a dollar out of private hands for the government to spend versus one spent in the private sector? Under which circumstance does that dollar of spending do the most economic good for the most people? Is the "good" done by the government spending greater than the harm done by taking this money out of the hands of private commerce?

jafs 5 years, 11 months ago

At least you're asking the question in your last paragraph, which I appreciate.

I'd just point out again that if the money circulates in the economy, it's not "taken out" of the private sector.

Where else is money spent?

If the government hires somebody to build roads, that's the private sector. If it hires people to work for the IRS, they spend their paycheck in the private sector. Even if it just gives people welfare benefits, they spend it in...the private sector.

tbaker 5 years, 11 months ago

Come on Jafs! You've demonstrated above average intelligence on this blog many times, yet this point still eludes you despite L1 and my repeated attempts to clear this up. Spending done in the free market economy is orders of magnitude more efficient and more productive (the same dollar does more) than spending done by government. This is the classic Keynes vs. Hayek argument, the later winning a Nobel Prize in Economics, the former developed many of his ideas with Italy’s dictator Mussolini. Hayek has written several books that explain this, as well as his protégés Thomas Sewell and Milton Freeman. You should read some of them.

Here goes: Since government has no money, it has to be taken in taxes or borrowed and paid-back with taxes. Therefore every dollar the government spends is one dollar less for the private sector to spend. Why is this bad you ask? What makes this “worse” than private sector spending? Aside from the philosophical arguments about liberty and personal property rights, private spending and investment decisions are allocated on the basis of economic forces. People seek the best return on their investments or the best deal on their purchases. This creates competition in the market which results in innovation and efficiencies growing and costs being driven down (better, faster, cheaper). Creative destruction occurs – inefficient, costly businesses go under which frees-up capitol to flow into more efficient, profitable business, etc, etc. Governments on the other hand allocate much if not most of their spending on the basis of politics. The result is that government spending introduces a host of inefficiencies into the economy, not to mention crowding out the private sector. Public spending also tends to be set by past political trends and promises, rather than by informed decisions based on the current evidence. Private spending is utterly focused on value (getting your money’s worth) and this is constantly tested by the market, where the government is predisposed to completely ignore this criteria. (Remember the $700 toilet seat?)

Reducing government spending therefore (letting people keep more of what they earn) frees up assets for more productive use and leads to more economic growth. History clearly shows over and over the government that stimulates the economy best, is one that taxes, spends, and intrudes the least.

I caveat my answer (again) by saying if the spending is constitutional, the argument is moot. If the spending is on the main functions of government (legislative, judicial, police/military) then I say that is simply the cost of doing business. See; Adam Smith in the “Wealth of Nations.” It is the huge expansion of government into a vast array of things it shouldn’t be involved in that is causing the problem.

just_another_bozo_on_this_bus 5 years, 11 months ago

"Spending done in the free market economy is orders of magnitude more efficient and more productive "

And if you repeat it over and over, and click your heels even more times, it just has to be true, right?!?!!!!!

jafs 5 years, 11 months ago

You just keep saying it, without any evidence or proof - I understand you believe it, but it's not convincing to me without evidence.

There is certainly waste in government spending, but also in private spending - do you know how much money celebrities spend on hotel rooms?

And, if the economy needs a boost, and private sector spending is down, then government spending will be better for the economy than private sector non-spending.

While I abhor $700 toilet seats and the like, that money hasn't disappeared - it goes to somebody who will then, in all likelihood, spend it in the private sector in a variety of ways.

Your next to last paragraph is not at all true, as far as I can tell, since the last time we had balanced budgets, tax rates were higher. When Clinton was president, the economy was splendid, with budget surpluses for the last 4 years of his term, low unemployment, etc.

Keynes advocated a role for the government in both stimulating a weaker economy, and slowing the growth of a booming economy, in order to create more stability, and fewer boom/bust cycles.

If we followed his advice, we'd have money from the boom times to use to stimulate the economy in down times, and thus not have to run deficits, which would be a good thing, in my view.

I'm not some sort of fanatic Keynesian, but I also don't think that economic theories have the same status as hard science - there's probably a little truth in most of them, but none are absolutely true, or apply in all situations.

tbaker 5 years, 11 months ago

Remember the part where I suggested you read some books by FA Hayek, Thomas Sewell, and Milton Freeman? Perhaps even Ludwig von Mises? Therein lies the evidence you seek. If I owned them in digital form I would include a link right now. The prosperity under Clinton was caused by a republican congress, not to mention a roaring economy. Remember Presidents can't tax and spend, only congress can. If Keynes was right, I wouldn't be typing this write now. Stimulus spending has made the recession deeper and made it last longer, just like FDRs policies made the great depression worse. Like I said, the people are much better off under government which taxes, spends, and intrudes the least.

eel 5 years, 11 months ago

New Kansas Tax Act: Most Oppressive and Regressive in U.S.

Gov. Sam Brownback’s signing of the new Kansas Tax Act on Tuesday was a historic event. The act will shape the lives of Kansans for many years to come.

The nonpartisan Legislative Research Department has estimated that the act will reduce Kansas government revenues by $4.5 billion over the next six years. Inevitably, there will be major reductions in the government services Kansans have come to expect — especially education.

Equally important, the act dramatically changes the Kansas tax system, shifting the income tax burden from the wealthy and prosperous to working people. The act provides that all income of business owners is tax-free (except in the unusual case where a regular corporation is used). Although the act was promoted as a boost to small business, there is no limit on the size of business that can be exempt from tax.

Income of professionals — such as doctors, lawyers, architects, and accountants — practicing in partnerships will be tax-free. In a law firm, for example, the partners will pay no tax, while the clerical staff will continue on the tax rolls.

Income received from partnerships and trusts will be tax-free. Wealthy Kansans who own real estate, stocks, bonds and other investments will simply transfer those assets to a partnership or trust, thereby freeing all their investment income from tax.

All income of farmers will be exempt from tax.

Who will still be paying Kansas income tax? Only three groups: 1) employees, 2) some retirees and 3) individuals whose investments are so modest that they cannot afford to create a trust or partnership to shelter their investment income.

Kansas government relies on three taxes: property, sales and income. Property and sales taxes are regressive in the sense that a lower-income person pays more of these taxes as a percent of income than does a higher-income person. The new income tax will be dramatically regressive. Low- and moderate-income workers will remain on the tax rolls. Meanwhile, wealthy Kansans will readily escape the tax, and many prosperous (but not wealthy) Kansans will be able to evade the tax as well. Beginning in 2013, the Kansas tax system will be among the most regressive in the nation.

Can a just society tax the poor while not taxing the rich?

Kyle Chandler 5 years, 11 months ago

I for one AM DYING to have a 'public' discussion with you Mr. Dave Trabert. I'll help organize this. Whaddya think Dave???Lets do it next to the SRS office or in a elementary school cafeteria. They could use the 'banquet use' fee.

Dave Trabert 5 years, 11 months ago

sure, let's set it up and invite the public. Write to me at and we can work out the logistics.

chootspa 5 years, 11 months ago

Let's make it a state fundraiser! If we charge $10 per plate, we only need to sell 6.5 million of them.

yourworstnightmare 5 years, 11 months ago

I find it odd that Mr. Trabert, head of the Kansas Policy Institute, is reading the posting after articles in the LJW. I guess it is the first time a republican has taken any interest in what Lawrencians think and say, so maybe it is progress.

pace 5 years, 11 months ago

All I can say, Vote Democrat. Donate to Democrats, Be sure to have your GOP paperwork and don't let the GOP turn you away at the ballot box. Protect the vote.

We will need antibiotics after 4 years of Brownbackia.

chootspa 5 years, 11 months ago

Also the price of tea in China fell by five cents.

Centerville 5 years, 11 months ago

Why wasn't Steve Morris in the picture? We owe the tax cuts to him.

John Sickels 5 years, 11 months ago

You guys are missing the economic genius behind Brownback's plan.

Bankrupting the state government, reducing taxes on the wealthy, increasing taxes on the poor and middle class, damaging the schools, and ruining the lives of the developmentally disabled will have a stimulative effect on the economy. It will create thousands of jobs by increasing the demand for liars, lobbyists and propagandists to defend the plan.

yourworstnightmare 5 years, 11 months ago

Creative destruction. Brownback certainly has the destruction part down pat.

equalaccessprivacy 5 years, 11 months ago

Posters are doing an unusually strong job of staying on-topic, so I'll break set by commenting that "I see some problems with it" were the same words I heard from the Department of Education when I complained about KU's poor excuse for grievance procedures. Hardly the most cutting-edge state one could ever hope to live and work in! One happy Dorothy is writing this comment-- glad to escape this intellectually barren ( no heart, no brains, no courage) place half alive!

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