In The Grip Of Tax Cut Obsession

The Beast Must Be Fed

A friend pointed us to a recent article about tax cuts that have been enacted in Kansas. In the article it is argued (incongruously) that tax cuts seem to have harmed the economy, or at last seem not to have helped it.

As our friend inter alia remarked to this:

“People in CA and on the eastern seaboard take it for granted that states charge a high income tax, typically around 10%, and there is very little graduation (i.e., you hit the top rate on very low income, typically under $10K). By contrast, a few fortunate states such as Texas somehow manage to get by with zero income tax. This is a huge draw. I can’t tell you how many easterners and Californians I have met over the years who are truly shocked that a major state like Texas, second most populous in the country and home to a bustling economy, doesn’t penalize its residents for the offense of earning money.”

“That backdrop brings us to this article, a typical castigation by the tax-loving media in response to efforts by the Kansas governor to reduce Kansans’ tax burden.”

(emphasis added)

Indeed, the article is just one jeremiad among dozens of similar ones found in the media every month. A great many journalists seem to be united in the erroneous belief that the more of their hard-earned money citizens are forced to fork over to bureaucrats and politicians, the better it is. Incidentally, Paul Krugman has also held up Kansas on several occasions as an example for the evils allegedly associated with tax cuts.

As far as we can tell, the main reason for this is that there is such a paucity of examples of things not getting better in every respect after taxes have been cut, that when the occasional exception to the rule comes along the statist crowd pounces on it like a man lost in the desert who unexpectedly happens upon an oasis brimming with fresh water.

See here, the etatistes cry, the economy of Kansas hasn’t improved since taxes were cut! Proof positive that tax cuts are economically harmful, always and everywhere! Cutting taxes is nothing but an unjustified Republican obsession. There is no mileage in people being able to keep more of their money! Actually, there is very little to support this conclusion, which must of course be rejected  on theoretical grounds anyway. The article states:

“The traditional champions of tax cuts, conservative Republicans, haven’t occupied the White House since 2008, when Barack Obama was elected as president. In many “red” states, however, Republicans are in charge. And they are making policy along rigid conservative lines.

Kansas may be foremost among them. Its governor Sam Brownback, a former US congressman and senator, led an aggressive effort to cut taxes soon after winning office. The idea is that tax cuts would reinvigorate job growth and bolster the state’s economy, replenishing state coffers along the way.

It hasn’t worked out all that well. Kansas’s job picture has improved since 2011 when Brownback took office. But rates of job growth have been slower than the country as a whole and compared with nearby states like Nebraska and Missouri. Meanwhile, and predictably, revenues have fallen faster than spending, forcing the state to dip into reserves.

Moody’s downgraded its debt rating on Kansas in April, citing “sluggish economic recovery and a structurally imbalanced budget.” S&P followed, axing Kansas’ debt rating today. S&P analysts say that “substantial shortfalls in individual income taxes” will likely eat into the state’s cash cushion at a very low 0.6% of expenditures, far too thin for a period of economic expansion.”