Members of the Kansas Center for Economic Growth are visiting North Carolina this week to share what has happened in Kansas following massive tax cuts signed into law by Governor Brownback back in 2012. Kansas has become a case study of the grave consequences resulting from a dogged pursuit of tax cuts as an economic growth strategy. The results are not that good.
In 2012, Kansas enacted tax cuts that were considered among the largest ever enacted by any state. Tax cut proponents in other states – including North Carolina state lawmakers – held Kansas up as a model to be replicated. Accordingly, North Carolina state lawmakers followed Kansas’ path and passed huge income tax cuts in 2013 that largely benefited the wealthy and profitable corporations and significantly reduced available revenue for public investments.
For Kansas, the reality in the wake of the costly tax cuts has been nothing to write home about. Here are some low-lights of Kansas’ experience, accordingly to the Center on Budget and Policy Priorities.
- Deep income tax cuts caused large revenue losses. Kansas’ tax cuts last year cost the state more than 10 percent of the revenue it uses to fund schools, health care, and other public services, a hit comparable to a mid-sized recession. The revenue loss is expected to rise to 16 percent in five years if the tax cuts are not reversed.
- The tax cuts delivered lopsided benefits to the wealthy. Kansas’ tax cuts didn’t benefit everyone. Most of the benefits went to high-income households and taxes were even raised for low-income families to offset a portion of the revenue loss.
- Kansas’ tax cuts haven’t boosted its economy. Since the tax cuts took effect at the beginning of 2013, Kansas has added jobs at a pace modestly slower than the country as a whole. Furthermore, the earnings and incomes of Kansans have performed slightly worse than the U.S. as a whole as well while the number of registered business grew more slowly in 2013 than in 2012.
And here are further low-lights of Kansas’ reality since passing the costly tax cuts, based on recent analysis by the Kansas Center for Economic Growth.
- Support for local government has declined by more than 5 percent: Dollars that support services that make it possible to keep communities healthy, safe and educated across Kansas are down when taking into account rising costs.
- Support for neighborhood schools is down almost 6 percent: State cuts to education put at risk the high quality of public schools that Kansas has always provided its residents.
- Communities are raising property taxes to make up the difference: County property taxes went up over 3 percent in just one year. As costs increase, the burden of maintaining even basic levels of services is now being shifted to counties, with Kansas’ rural counties hit especially hard. Of the 20 counties with the highest increases in property taxes, 17 were rural.
Despite the less-than-stellar economic performance for Kansas in the wake of the massive and costly tax cuts, North Carolina state lawmakers choose to take a similar path. There is no reason to believe that North Carolina’s experience will be any different from Kansas’ and yet more income tax cuts continue to be proposed.
Hopefully the cautionary tale of Kansas’ failed experiment with income tax cuts will give policymakers in North Carolina pause.