Topeka ? Kansas gained national notoriety in 2012 when Republican Gov. Sam Brownback and the GOP-led Senate embarked on a bold experiment of slashing state income taxes, and eliminating them altogether for some people, as a way of stimulating the Kansas economy.

For three years, the wisdom of those tax cuts has been debated on the editorial pages of the New York Times and Wall Street Journal. And they have been roundly praised or criticized by commentators on cable news programs at Fox and MSNBC.

Now, as the Kansas Legislature is now being asked to raise taxes to fill in a roughly $400 million budget hole, conservatives who supported those tax cuts know their decision will be seen as a verdict on those tax cuts, sending a message both locally and nationally about whether Kansans themselves think the tax policy either did or didn’t work.

“I think the perception is that, see, this didn’t work,” said Rep. Marc Rhoades, R-Newton, a strong supporter of the 2012 tax cuts. “Even if you tweaked it … that argument wouldn’t go into any great detail. What would be conveyed in the media, what would be plastered out there — I think it would embolden people who said that was a mistake.”

“Clearly this is not a tax plan that has failed,” said Rep. Kasha Kelley, R-Arkansas City, another defender of the tax cuts. “This is a tax plan that is taking some time to take root, as all new things do, and to send a signal that it doesn’t work to the rest of the nation, I think, is detrimental.”

But many, including Democrats and Republicans, say it is time to reverse course, either because the tax cuts haven’t worked, or because the state simply can no longer afford them.

“They’ve been a complete failure,” said Sen. Tom Holland, D-Baldwin City. “My concern, though, is that we have a lot of members in denial, both in this chamber and the House, who will try to be good soldiers and muster on under a continuing failed policy of Governor Brownback.”

Rep. John Edmonds, R-Great Bend, is among those who says it no longer matters.

“If you find yourself in a hole, the first thing you do is stop digging,” Edmonds said. “Now, it would be better if you hadn’t dug the hole in the first place. But if you find yourself in a hole, quit digging.”

Theory behind tax cuts

The tax cuts were based on the supply-side economic theories of Arthur Laffer, a former advisor in the Reagan administration whom Brownback hired as a consultant for $75,000 to devise a tax plan to stimulate the Kansas economy.

It came just as the national economy was coming out of the Great Recession and revenues flowing into state coffers were beginning to recover. Instead of using that money to restore cuts that had been made under Democratic Gov. Mark Parkinson, Brownback chose to enact sweeping cuts in state income tax.

That involved lowering tax rates for everyone, but particularly those at the upper end of the income scale, by eliminating the top marginal tax rate and phasing down the other two rates, setting the state on what Brownback called a “glide path to zero,” with the goal of eventually eliminating all state income taxes in Kansas.

Part of the package exempted an entire class of individuals from paying any income tax: business owners such as farmers, lawyers, doctors and others whose personal income was derived from their business profits.

The theory was that by lowering and eventually eliminating income taxes, particularly on those who create jobs, more money would be left in the private-sector economy, boosting employment and other economic activity to such a point that sales and other forms of revenue would more than make up for the loss of income taxes.

Brownback himself called his plan “a real live experiment” and predicted the tax cuts would be “a shot of adrenaline” to the heart of the Kansas economy.

Evidence cited for the tax cuts

During his re-election campaign last year, Brownback repeatedly pointed to several factors that he said demonstrated that his tax cuts were working: the state’s declining unemployment rate, rising private-sector employment and strong wage growth.

Budget director Shawn Sullivan repeated some of those assertions in April, when he and other budget officials released new estimates drastically lowering their predictions of how much revenue the state would collect in the next fiscal year.

More recently, conservative lawmakers and other defenders of the tax cuts have pointed to an op-ed column published earlier this month in the Wall Street Journal by Andrew Wilson, a senior fellow at the St. Louis-based Show-Me Institute. That’s a conservative think tank that is part of a national network that includes Kansas Policy Institute.

Wilson cited labor market data, including “data crunched by the Kansas Policy Institute,” showing that since the tax cuts were enacted, Kansas has experienced stronger-than-average growth in private-sector jobs and wages.

“This is a matter of history,” Kelley said. “We know what works. We’ve seen this nation come through when economic times are tough, and you don’t want to backtrack and go down the wrong path.”

After a recent Senate tax committee meeting, Chairman Les Donovan, R-Wichita, insisted the Brownback tax plan was working.

“I think it is. I think it will. But it doesn’t happen as fast as you all would like to see it. Never has; never will,” he told reporters.

Evidence to the contrary

Critics of Brownback’s tax plan often accuse Brownback’s supporters of cherry-picking data, carefully selecting the starting and stopping points of the time frame they examine, and frequently ignoring other factors that may have influenced an economic trend.

They point to longer economic trends and broader measures of economic performance to show that overall, the Kansas economy is still lagging behind its neighbors and the nation as a whole.

As recently as Friday, the Kansas Department of Labor reported that the state actually lost 2,900 private-sector jobs in April, and that over the previous year, private-sector job growth had been a mere 1 percent. According to the Bureau of Labor Statistics, that’s about half the national rate of employment growth during that same period.

A recent economic forecast from researchers at Wichita State University said that trend would likely continue for the next year, with total employment growth in Kansas estimated at about 1.3 percent in 2015.

“I don’t know where the votes are in the Legislature,” said Rep. Tom Sloan, R-Lawrence. “I think among the public the verdict is that the tax plan of 2012 has not succeeded.”

Holland was more direct in his assessment.

“We invested $741 million in income tax cuts, and we have nothing to show for it,” Holland said, referring to the decline in state income tax collections since the cuts were enacted. “We don’t have any discernable increase in jobs. We don’t have any discernable increase in revenues from other revenue sources to fund state services. It’s been a failure.”

Next step for Kansas Legislature

Kansas lawmakers adjourned Friday for a four-day weekend. During that time, legislative leaders are reportedly expected to huddle, possibly with Brownback’s staff, to arrive at a tax plan they hope can win majority support in both chambers.

At the same time, rank-and-file legislators are certain to be hearing from their constituents about funding needs for roads, public schools, universities and other state services, as well as which taxes constituents think should be raised and which ones shouldn’t.

But how they will eventually determine the success or failure of the 2012 income tax cuts is up in the air.

“I can take you down either track and make an argument either way,” Edmonds said. “There are people who think it’s bad policy. There are people who think there are other things happening in the world with the national economy, Obama’s policies, etc.

“You really can’t sort out those facts from one or the other,” he said. “There’s always other stuff going on. There’s really no way to do a controlled experiment. So in the end, I’m going to tell you, you probably don’t know. You can make an argument either way.”

Evidence supporting tax cuts

• Private sector employment: Kansas has added 16,100 private sector jobs in the past year. (Kansas Department of Labor)

• Unemployment: The rate has fallen since tax cuts took effect to 4.3 percent in April, down from 5.5 percent in January 2013. U.S. rate is still 5.4 percent. (Bureau of Labor Statistics and Kansas Department of Labor.)

• Personal income: Has risen faster in Kansas since 2013 than other states in the region: 6 percent growth in Kansas, compared to 5 percent in Plains region. (Bureau of Labor Statistics)

• Wages: Average weekly wages for private sector workers in Kansas have risen 2.2 percent in the last year, to $783.87.

Evidence against tax cuts

• Private sector employment: The 16,100 new jobs represent 1 percent growth, compared to 2.5 percent growth nationally. (Bureau of Labor Statistics)

• Unemployment: Kansas unemployment is typically lower than the national average. The U.S. as a whole had a bigger hole to dig out of after the Great Recession. While the Kansas jobless rate has fallen 1.2 percentage points, the U.S. rate has fallen 2.6 percentage points. (Bureau of Labor Statistics)

• Personal income: The 6 percent growth rate in Kansas still lags the rest of the nation, where personal income grew more than 7 percent in the two years since the Kansas tax cuts were enacted. (Bureau of Labor Statistics)

• Wages: Kansas is doing no better than the rest of the nation, where average weekly wages have risen at about the same rate of 2.2 percent. (Bureau of Labor Statistics.)

• State revenue: From 2012 to 2014, total revenues to the state fell by $759.6 million, more than the falloff caused by the Great Recession of 2008-2010, which was $502.1 million. (Kansas Division of the Budget)

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