Showing posts with label tax cuts and deficits. Show all posts
Showing posts with label tax cuts and deficits. Show all posts

Wednesday, April 1, 2015

Kansas --- Brownback and his administration are taking the state down the toilet

There's nothing but bad news in Kansas on revenue and their economy:

Kansas tax revenue $11.2 million less than expected in March

Weak sales, corporate income and oil tax revenue to blame

Tax revenue to the state of Kansas slipped $11.2 million below estimates in March, state officials said Tuesday.
Collection of sales, corporate income, and oil and gas severance taxes fell below forecasts developed by state officials in November. Projections were revised downward at that time to reflect diminished optimism about the state’s short-term economic future.

House Minority Leader Tom Burroughs, D-Kansas City, said sweeping state income tax reductions were marketed by the Republican-led Legislature and Gov. Sam Brownback as a “shot of adrenaline” to the heart of Kansas’ economy. After three years, Burroughs said, the GOP’s tax policy had been exposed as “more like an ax wound.”
“Kansas continues to bleed revenue as is evident by this month’s numbers," he said. "How we resolve this issue remains unknown as the legislative session is nearly over and we haven’t seen a comprehensive balanced budget.”

State revenue has fallen hundreds of millions of dollars since implementation of legislation approved by the 2012 Legislature and Brownback to repeal state income tax on owners of more than 300,000 businesses and to reduce individual income tax rates.
Kansas is in such bad shape, unable to manage the minimally necessary safety maintenance on its infrastructure that the state is starting to fall down in rubble.  You can be confident that the Republican majorities at the Federal level are doing the same slighting of infrastructure; they won't make up the gaps.  From the Wichita Business Journal:

No April Fools' Day Joke: 2,416 of Kansas's Bridges Need Structural Repair, New Analysis of U.S. Department of Transportation Data Finds

Federal Highway & Bridge Funding Facing May 31 Deadline

The analysis of the federal government data, conducted by American Road & Transportation Builders Association (ARTBA) Chief Economist Dr. Alison Premo Black, shows cars, trucks and school buses cross Kansas's 2,416 structurally compromised bridges 787,632 times every day.  Not surprisingly, the most heavily traveled are on the Interstate Highway System, which carries the bulk of truck traffic and passenger vehicles

....
The ARTBA analysis of the bridge data supplied by the states to the U.S. DOT also found:
  • Kansas ranks 7th place nationally in the number of structurally deficient bridges—2,416.
  • Kansas ranks 22nd place in the percentage of its bridges that are classified as structurally deficient—10 percent.

Sam Brownback's policies are literally jeopardizing the safety of Kansas citizens and anyone traveling in or through Kansas.

Sam Brownback has promised his policies would work given time.  The architect of those policies is failed Reaganomics trickle-down economist Arthur Laffer - famous, or infamous, for the Laffer curve.

Here is what Laffer was saying back in January 2015, and in 2012.
Back in August 2012, Laffer told a crowd at the Johnson County Community College, if Kansas would slash its income tax rates, it would result in “enormous prosperity.”
He told a reporter at the time that he had not produced an economic model on when Kansas will notice meaningful economic growth.
Two-and-a-half years later, Kansas is staring at a budget crisis, with more than a billion dollar gap between revenues and expenses projected in the current and next budget years. The state is also experiencing a low private job growth rate, as well as a slow-growing economy.
In a 45-minute phone interview, Laffer said while he is “not surprised,” he didn’t know why the deficits have occurred. He still believes adamantly in his supply-side economic theory: If you reduce income taxes, you will raise more revenue, not less.

...The 74-year-old former economist for President Ronald Reagan, who remains controversial among mainstream economists, was paid $75,000 to consult with Brownback and his staff before the tax-cut legislation passed in 2012. Some say Laffer was the inspiration for the Kansas tax-cut plan, if not its architect.
He has stayed in touch with Brownback. Laffer told me the two talked just before the November election.

Read more here: http://www.kansascity.com/opinion/opn-columns-blogs/steve-rose/article7024256.html#storylink=cpy
No one in Kansas is laughing.  The state is swirling around on its final go-around down the crapper.  Kansas is severely under-performing the economies of adjoining states and the national averages, while facing a continuing severe revenue shortfall.  While Laffer -- and presumably Brownback -- want to wait to see results in ten years, the state doesn't have that long.  Further, there is ZERO evidence that following this economic model and policies will EVER produce the desired results.

These are the same policies touted in other red states, and by conservatives at the federal government level.  NEVER have these policies produced the promised economic results.  What they do produce is a more rapidly expanding instability from the enormously widening chasm of wealth and income inequality.

Like fictional cartoon figure Bullwinkle the Moose,  Governor Brownback continues with the line "this time, for sure!", believed only by the most gullible, the most credulous, and possibly a handful of toddlers.

The latest news refutes the promises and claims made by Brownback.

As noted by the Center for Budget and Policy Priorities:
  • 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.  Kansas even raised taxes for low-income families to offset a portion of the revenue loss; otherwise the cuts to schools and other services would have been greater still.
  • 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.  The earnings and incomes of Kansans have performed slightly worse than the U.S. as a whole as well.  (An exception is farmers, whose incomes improved as the state recovered from a drought.)  And so far there’s no evidence that Kansas is enjoying exceptional business growth: the number of registered business grew more slowly last year than in 2012, and the state’s share of all U.S. business establishments fell over the first three quarters of last year, the latest data available.
  • There’s little evidence to suggest that Kansas’ tax cuts will improve its economy in the future.  No one knows for certain how Kansas’ economy will perform in the years ahead, but it isn’t likely to stand out from other states.  The latest official state revenue forecast, from November 2013, projects Kansas personal income will grow more slowly than total national personal income in 2014 and 2015.[1]
Evidence from other states and academic studies casts further doubt on claims that the tax cuts will cause the state’s economy to boom.  States that cut taxes the most in the 1990s performed worse, on average, over the course of the next economic cycle than states that were more prudent.[2]  And the academic literature overwhelmingly finds that states with lower personal income taxes perform no better economically than their peers.[3]




It's not just Kansas; every other Republican administered state with Republican majority or super-majority legislatures that emulated these policies is having similar problems.  Conservative Economics, like Republican Math, DO NOT WORK.  Today from Yahoo Finance News:

Why State Tax Cuts Aren’t Driving Job Growth
But the dramatic tax cutting doesn’t appear to have done nearly as much for job growth as promised. 
The Milwaukee Journal Sentinel says that Wisconsin ranked 35th of the 50 states in job growth during the first three years of Scott Walker’s term, and dead last among its immediate neighbors, including, Minnesota, Illinois, Indiana, Iowa, Michigan and Ohio.
Kansas hasn’t fared much better. According to the Center on Budget and Policy Priorities, the state’s rate of job growth has lagged the national average since Brownback’s tax cuts took effect.
North Carolina, at least, matched the national average in job creation in 2013. But the total number of jobs added to the state’s economy in the second half of the year – when the tax cuts went into effect, was actually smaller than the total number added in 2012.
Repeat after me: REPUBLICAN ECONOMIC POLICIES SUCK, THEY DO NOT WORK, THEY DO NOT DELIVER AS PROMISED.  And if you're planning to travel to any of these red states, you might want to find routes that don't require any kind of bridge crossing.  That is, just to be on the safe side.

Thursday, September 29, 2011

Politifact FAILS the Right Wing Claim
"every time we've cut taxes, revenues have gone up, the economy has grown"



The Truth-O-Meter Says:
Walsh

"Every time we've cut taxes, revenues have gone up, the economy has grown."

Joe Walsh on Sunday, April 17th, 2011 in an interview on "This Week with Christiane Amanpour"

Rep. Joe Walsh said that every time we've cut taxes, revenues have gone up, the economy has grown

Members of the tea party movement like to say the "tea" stands for "taxed enough already." Several House members on ABC's This Week with Christiane Amanpour said they stand by that sentiment, even if tax increases could more quickly balance the budget.
Amanpour asked if it was realistic to oppose tax increases while also calling for a balanced budget. "Can you really sustain what everybody is calling for, just by cuts in public services? Doesn't there need to be revenue-raising mechanisms?" she asked.

"Christiane, you raise revenue by growing the economy," said Rep. Joe Walsh, R-Ill, one of several new House members elected with tea party support. "And everything this president has done the last two years has gone against that. You get taxes and regulations off the backs of businesses so that revenues can increase."

"I know that that is your position," Amanpour said. "But there's so much evidence, even going back to Ronald Reagan, where he did tax cuts and in fact the debt increased, and then he had to make tax increases. I mean, can you really cut public spending by that amount and just expect to balance the budget?"

Walsh answered, "In the '80s, government revenues went up. We didn't cut spending. Revenues went up in the '80s. Every time we've cut taxes, revenues have gone up, the economy has grown."

We decided to check out Walsh’s claim that "Every time we've cut taxes, revenues have gone up, the economy has grown."
We should first note that on its face, Walsh’s statement is not accurate. The White House Office of Budget and Management publishes detailed tables of government collections of income taxes. There was a small dip in 1983, after President Ronald Reagan signed off on a tax cut in 1981, though tax revenues increased the next year and all through the 1980s. More significantly, income tax revenues fell in 2001, 2002 and 2003, as President George W. Bush successfully pursued tax cuts.

We contacted Walsh’s office, and his staff told us that the Bush tax cuts didn’t reach their full impact until 2003 (when the top rate decreased to 35 percent, where it now stands), and that tax revenues increased after that.

"The pickup in economic growth, and the strong growth in revenues, coincides fairly neatly with the 2003 tax cut," said spokesperson Elizabeth Lauton via e-mail.

But the question of rising revenue is more complicated than that.  For one thing, economists expect tax revenues to go up each year due to economic growth, population growth and inflation, even if tax rates stay the same. So saying "revenues have gone up" isn’t particularly meaningful in that context.

Given that, it would be more significant to be able to say what effect tax changes have on the overall economy. But this isn’t easy, because so many things affect the economy more than the federal tax code. What this means is that you can raise taxes during a bad economy and get less revenue, or you can cut taxes during a time of economic growth and get more revenue.

Those changes to revenue generally aren't caused by the tax rates at all, but by other changes in the broader economy. President Bill Clinton, for example, raised taxes in 1993, and the economy expanded for much of the 1990s and tax revenue went up.

"There's no clear relationship between taxes and economic growth," said Bob Williams of the nonpartisan Tax Policy Center. "Too many factors complicate the picture to draw clear conclusions about the taxes-growth relationship."

Additionally, a 2006 report from the U.S. Treasury Department concluded the effect of most tax laws on the wider economy were "uncertain, but probably generally small."

Previously, we’ve rated statements that tax increases lowered revenues, and we’ve found that False. Walsh’s statement stops short of such a claim, but it does leave the impression that tax cuts could help the budget picture, and that’s problematic.

The 2006 Treasury report sought to document the revenue effects of every major tax law passed since 1940. To compare the different laws, it examined tax revenues as a percentage of the Gross Domestic Product, a measurement that accounts for economic growth and inflation.

The report found that laws that lowered taxes produced declines in revenues, and that laws that increased taxes produced increases in tax revenues. This undermines claims that tax cuts can actually increase government revenues more than they would have increased otherwise.

We’re examining Walsh’s statement, "Every time we've cut taxes, revenues have gone up, the economy has grown." He said "every time," and that’s not the case. Revenues did not go up in 2001, 2002 or 2003, after tax rates were lowered. We also find it problematic to make hard claims about tax cuts growing the economy enough to increase tax revenues and helping balance the budget. Overall, we rate Walsh’s statement False.