Brookings Institution: Kansas income tax cuts were not a good idea

Gov. Sam Brownback thinks of himself as a Ronald Reagan-style conservative.

In most cases, Republican politicians relish the prospect of being put side-by-side with the popular late president.

But a Brookings Institution tax expert writes this week that Brownback is following Reagan down an income-tax-cut path that never leads to promised economic benefits.

“In the extreme versions that thrived through the early Reagan Administration years, supply-siders argued tax cuts would pay for themselves by increasing growth substantially,” writes William Gale, a co-director of the Urban-Brookings Tax Policy Center. “After decades in which lower tax rates generated less revenue rather than more, today’s supply-siders usually make more the modest claim that tax cuts will spur growth that makes up for part of the revenue losses.”

Gale writes that Reagan chief economist Martin Feldstein is among those who have concluded that the former president’s highly touted 1981 tax cuts “had virtually no net impact on growth.”

States that have tried the income-tax-cut approach haven’t fared much better, according to Gale. 

All of which brings him to Kansas. Here, Gale lays out what Kansans already know: State revenues were so far off the mark that lawmakers scrambled to come up with enough money (realized through new taxes, of course) to keep the lights on in Kansas. All during a time when other states’ economies started flourishing.

After Brownback’s promise that the 2012 tax cuts would be a “shot of adrenaline” to the state economy fizzled out, he’s changing his approach to discussing the state of affairs in Kansas.

In a question and answer article in last week’s edition of the Kansas City Business Journal, Brownback says that state revenues aren’t the canary in the Kansas economic coal mine. 

“And I came in and said, you know, the thing that has worked around the country is to get your income taxes down; get off income taxes. And we’ve got a lot of data on that,” Brownback told Business Journal editor Brian Kaberline. “But the target has always been economic growth and jobs, not revenue to the state.”

But flourishing economic growth and jobs aren’t quite apparent in Kansas.

The U.S. Bureau of Labor Statistics indicates that private-sector employment in Kansas grew at a rate that lags behind most nearby states over the last year. Kansas nonfarm payroll increased by 0.73 percent from June 2014 to April 2015. Only Missouri grew at a slower rate over the same span. States like Iowa (1.22 percent growth) and Colorado (2 percent), which have not enacted similar income-tax cuts, saw private job growth easily eclipse Kansas.

Brownback went on, suggesting that Kansas has not kept pace with population over the years, losing congressional seats along the way.

“I’m speaking in Montreal at a tax competition conference. That’s what we ought to be talking about, is tax competition,” Brownback told the newspaper. “Because people move based on income tax rates.”

But there’s little evidence to support the notion that people move in meaningful numbers because of income-tax rates.

In fact, since 2012, Kansas had the lowest percentage increase in population growth among all nearby states, according to U.S. Census data. Colorado’s population grew by 3.16 percent from 2012 to 2014. Oklahoma’s grew by 1.6 percent over the same span. Kansas? Only a 0.62 percent increase in population since those tax cuts.

All this during the same week that Brownback has to find ways to cut another $50 million from the budget.