Editorial: Proof that tax cuts were bad
photo by: Journal-World Photo Illustration
The report released this week showing that personal income in Kansas grew at 4.7 percent during the second quarter is further evidence that state legislators were right to repeal the disastrous tax-cut policies implemented under Gov. Sam Brownback’s administration.
The report by the U.S. Bureau of Economic Analysis showed income growth in the state outpaced regional and national averages. The report showed that Kansas had the 10th highest personal income growth rate in the nation.
The report is welcome news after years of economic stagnation. It also is validation that the state is on better economic footing under current tax policies than it was under the policies of former Gov. Sam Brownback.
Brownback pushed through sweeping income tax cuts in 2013, including eliminating income taxes on more than 300,000 small businesses through the so-called LLC exemption. Brownback promoted the cuts as an experiment that he believed would jump-start the state’s economy, fostering job and wage growth. It never happened. Job and wage growth lagged well behind national averages. Tax collections fell well below expectations month after month, and the state found itself on the brink of fiscal crisis.
The tide began to change when legislators from across the aisle finally bucked Brownback in May 2016, voting to repeal his tax cuts, and then after he vetoed the repeal, mustered the two-thirds majority necessary to override his veto.
It would be wrong to say the change has been instant. For example, the income growth rate in Kansas in all of 2017 was just 2.4 percent, which lagged behind national averages. The Kansas economy still ranks just 44th on Business Insider’s ranking of state economies for 2017.
But here is what has happened — the unemployment rate has fallen from 4 percent to 3.3 percent. As the Bureau of Economic Analysis report shows, wages have increased. And importantly, the state of Kansas collected more than $300 million in tax revenue than budgeted in 2017, giving state legislators opportunity to invest in critical economic infrastructure such as K-12 education, higher education and transportation.
The evidence is rather convincing; the Kansas economy suffered under the Brownback tax policies and it has begun to recover since those policies were repealed. That’s something voters should keep top of mind with the selection of a new governor for the state close at hand.