In Kansas, tax reform isn’t exactly playing out the way some lawmakers had hoped. The state that Grover Norquist once called “the starter gun for tax competition” has passed a series of income tax cuts over the past year with the stated goal of eventually eliminating income taxes altogether in the near future. This “race to zero” is well underway in several states with conservative governors and legislatures. Here’s a quick look at how that’s working out so far for Kansas:
A $2.5B budget shortfall
The Kansas Legislative Research Department is projecting a $2.5 billion revenue hole through 2018 because the legislature has yet to figure out an effective way to replace lost revenues as a result of the income tax cuts.
A threatened credit rating
Last month, a state court ruled that the Kansas legislature was breaking the law by underfunding public schools as a result of the income tax cuts, which prompted Moody’s Investors Service to warn of a negative credit risk for the state.
Less funding for public services
Concerns over the state’s credit rating aren’t the only thing that should give Kansans pause. By starving public schools and other services critical to economic success, the state is jeopardizing future growth. Read More…