OPINION AND EDITORIAL
HOW THE SHELL GAME OF REAGAN STYLE TRICKLE-DOWN ECONOMICS DESTROYED THE STATE OF KANSAS
May 07, 2016
If you haven't read this, you should. In fact it might be good if this were required reading for every high school and college level economics class in this country.
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It is a tale of how an entire generation of Americans has been sold a bill of goods, a false prophet if you will of salvation.
You may have heard this mantra repeated many times by politicians and other true believers across the country: just cut taxes across the board, unleash the "power of the free market" and the economy will catch on fire.
There will be a chicken in every pot, employment will soar and rosy times ahead are assured.
That is what is commonly called the theory of "trickle down economics" and it has now ruined the state of Kansas -- or so says a new piece in Mother Jones.
The report says a real-world experiment with that trickle-down number - one launched by Kansas Gov. Sam Brownback, a Republican after he was elected in 2010 - has been an unmitigated disaster. A total flop for the people of Kansas.
And that was with help from Arthur Laffer, the late Ronald Reagan's "mastermind of trickle-down economics."
So what happened in Kansas four years after those hefty tax cuts first went into effect?
No big explosion in private sector job growth as had been expected. The loss of tax revenue has "decimated the state budget, creating a fiscal crisis necessitating drastic cuts," Kansas is now $420 million short of the revenue it had the year Brownback's tax cuts first went in effect, a lot of folks are looking like fools and there's enough buyer's remorse floating in the air to choke a few large Alabama hogs.
Items from the report:
~ Brownback convinced state lawmakers to cut personal income tax rates across the board and eliminate the top tax bracket, with further reductions to come. The state also completely erased the income tax bills for the owners of certain "small" businesses -- including a host of subsidiaries of Wichita-based Koch Industries.
~ The story notes that the Koch-funded conservative group, "Americans for Prosperity" helped Brownback push the bill through.
~ The tax cuts were "sold by Brownback with the idea that they would pay for themselves when a renewed economy boosted state revenues despite the lower rates." Nothing close to that has occurred. In fact, just the opposite has occurred.
~ One Republican state Senator, Jeff Longbine told a Kansas newspaper that, "Those of us who come back next year better start figuring this out. And whether it's revenue or cuts, or a combination of both—but we cannot continue to play the shell game."
More on the Kansas shell game here .
According to news accounts listed at Wikipedia, Brownback's trickle-down move has received criticism for shifting the tax burden from "wealthy Kansans to low and moderate-income workers.""
Brownback's tax cuts helped contribute to Moody's downgrading of the state's bond rating in 2014 and they also contributed to the S&P Ratings' credit downgrade from AA+ to AA in August 2014 due to a budget that "analysts described as structurally unbalanced.
According to a July 2014 news story by Pulitzer prize winning reporter Michael A. Hiltzik, job growth in Kansas is trailing behind the national trend, revenues are declining every month and courts and state services as well as health care and assistance to the poor have suffered as a result of the tax cuts.
The Center on Budget and Policy Priorities says the tax changes pushed through by Brownback will cut taxes of the wealthiest 1% of Kansans by 2.2%, while the poorest 20% of Kansans will see their taxes increase by 1.3%, and that the large revenue losses deepened the recession's damage to schools and other state services.