Kansas GOP State Senator asks Congress to learn from Kansas while cutting taxes

[Shadows]

A message to Congress: Don’t make the same mistake we did in Kansas

In the following five years, Kansas experienced nine rounds of budget cuts, stress on state agencies and the inability to effectively provide the core functions of government for our citizens. As Republicans in Congress begin working to modify the federal tax code, I worry that tax reform done poorly could lead to similar failure. I hope federal lawmakers learn from mistakes made at the state level. This year, the Kansas legislature — including many Republicans like me — voted to partially restore income-tax rates and to repeal a provision that allowed independent business owners to pay almost no state taxes on their income. We also overrode our governor’s veto, who opposed rolling back the tax cuts he championed.

Critics of our vote claim that Kansas didn’t cut spending enough to accompany the tax cuts. In reality, we cut our budget through across-the-board cuts, targeted cuts, rescission bills and allotments. Roughly 3,000 state employee positions were cut , salaries were frozen, and road projects canceled . We delayed payments to the state employee retirement system and emptied our savings accounts. Even as we issued more than $2 billion in new bonds to float our debt, Kansas received three credit downgrades, making that debt costlier.  We want to believe promises of amazing growth or outcomes. In 2012, traditional budget forecast models accurately predicted the devastating effect the tax breaks would have on state revenue. Proponents of the plan used dynamic scoring predicting incredible economic growth and supporting their own preconceived ideas. Today, we know which forecasts were correct. (We should also note that failing to listen to constituents while blindly holding to ideology can have consequences: About a third of Kansas legislators became ex-legislators in 2016.)

https://www.washingtonpost.com/opinions/a-message-to-congress-dont-make-the-same-mistake-we-did-in-kansas/2017/10/19/fb6058a2-a9de-11e7-92d1-58c702d2d975_story.html?utm_term=.483113dbcfd5

[Shadows]

The GOP Tried Trump-Style Tax Cuts in Kansas. What a Mess.

Like Brownback, Trump is proposing simplifying and lowering individual tax rates. Like Brownback, he’s pushing an unusual tax cut for business owners that critics say opens up a major loophole. And, much more than Brownback ever did, Trump's team is promising that explosive growth will make up for the cost of their cuts.Brownback pitched his plan as a test of conservative policy. First, the state would cut income taxes (the top rate went from 6.45 percent to 4.9 percent) and eliminate taxes entirely on pass-through income for business owners. If, as the governor predicted, the cuts attracted new businesses, added jobs and boosted funding for schools and local governments, then income tax rates would decrease even further as part of a "March to Zero" that would end them entirely.

Over the next five years, state and local governments battled over a dwindling revenue supply, including a roughly $700 million drop-off in the first year. Job growth, meanwhile, lagged behind the national average and neighboring states. Financial ratings agencies, unimpressed with boasts of an impending boom, downgraded the state's debt in 2014. Standard & Poor's blamed Kansas' "structurally unbalanced budget" while Moody's also cited the income tax cuts in lowering its outlook. "The empirical evidence was clear that revenues fell off a cliff, especially individual income tax revenues," Kenneth Kriz, who has studied the plan's impact as director of the Kansas Public Finance Center at Wichita State University, told NBC News. "There was just no way they could make up that much lost revenue."

A study by four economists examined the Kansas pass-through measure and found that it had provided a major incentive for individuals to rejigger their finances in order to claim business profits that otherwise would have been taxed as individual income. That left the state with less revenue, but no apparent benefits to the economy. "We found essentially no changes in real economic activity, but changes in how income was reported in order to take advantage of the difference in rates," Jason DeBacker, a professor at the University of South Carolina and co-author of the report, told NBC News. The Trump administration is currently proposing to reduce the rate on pass-through entities to 25 percent, which would be 10 points lower than the top income tax rate under the Trump/GOP framework. Economists across the spectrum are worried it could create a similar loophole to Kansas that would benefit the ultra-wealthy like the president, whose own businesses are organized as a series of pass-throughs.

https://www.nbcnews.com/politics/white-house/gop-tried-trump-style-tax-cuts-kansas-n812701

[Southern Senator North Carolina Yankee]

This is like the tariffs of old. The Republicans kept pushing a policy proposal that no longer was beneficial simply because they were ingrained almost in their DNA that Republicans must raise tariffs to promote industrial growth. They did it in 1890, it backfired and cost them the 1892 elections and contributed to the Depression of the 1890's. By 1900 there was an understanding forming in the business community that tariffs did not work and that was because the US was the largest economy in the world, and was the low cost manufacturer. It didn't need protection, it needed markets. Even Mr. Tariff himself, McKinley was beginning to accept this line of thinking. Then he was assassinated.

Tariffs remained part of the Republican dogma for another 30 years, until the Great Depression and the Tariffs passed to combat it, clearly and demonstrably made it worse. The Republicans were weaned off of Tariffs by the New Deal Coalition's political dominance, especially with the working class, and the business community unequivocally saying "This doesn't work!" and Republicans embraced said community in opposition to the taxes and regulations of the New Deal. Laying the seeds for the next paradigm. A Republican Party opposed to taxes and regulations, not defined by support of tariffs, eventually Free Trade would even been assimilated into the small gov't DNA as just another tax and taxes are bad.

Now here we are. We have a policy proposal that was designed to combat the economy of the 1970's being peddled again and again as the appropriate answer to the conditions almost 40 years later. We don't have a supply shock, we have a demand shortage.

I have seen so many idiot talking heads on TV. One said the reform was unimportant and he couldn't care less and all he cared about was the cuts. That a-hole Puzder was on one of the shows earlier today and he was asked about a specific regulation being cut that was benefitting business and he said "well you don't here anyone talking about raising the federal minimum wage anymore".

The Republicans need to jettison these Wall Street whores, and embrace its base by getting money out of government yes and out of Wall Street gambling and paper pushing and put it back in pockets of working and middle class Americans on Main Street. I think they should throw in a 4th bracket to shift the bulk of the benefit to the middle class, they should remove the carried interest deduction, should make hedge funds pay at least the 20% proposed corporate tax rate and instead should raise the EITC substantially, raise the minimum wage to $9.50 and do infrastructure in Spring. This gets people off of welfare and back to work in a positive way, puts money into social security and medicare and substantially reduces the risk of another Wall Street originated economic crash.

It will also set us up with policies ready to combat a recession since some lead indicators point to one starting next year.

[Kingpoleon]

If Republicans cut taxes and raise spending, it’s “reckless spending or mindless Keynesianism” at best. If they cut spending and raise taxes, it’s “heartless/murderous austerity”.

[Indy Texas]

If Republicans cut taxes and raise spending, it’s “reckless spending or mindless Keynesianism” at best. If they cut spending and raise taxes, it’s “heartless/murderous austerity”.

Or maybe supply-side policies are unwarranted in an environment of low inflation, low unemployment and steady GDP growth.

[Kingpoleon]

If Republicans cut taxes and raise spending, it’s “reckless spending or mindless Keynesianism” at best. If they cut spending and raise taxes, it’s “heartless/murderous austerity”.

Or maybe supply-side policies are unwarranted in an environment of low inflation, low unemployment and steady GDP growth.

Sure, tax cuts right now doesn’t sound like a good idea. But if they went for an across the board tax hike of 5%, raising Medicare/Social Security eligibility to 70, cutting welfare(besides SNAP/HUD) by 20%, and a federal VAT of 5-10%, the left would go crazy. It would be too complex for most to argue beyond “Balancing the budget shouldn’t require cutting funds to the poor and elderly.”

[Shadows]

If Republicans cut taxes and raise spending, it’s “reckless spending or mindless Keynesianism” at best. If they cut spending and raise taxes, it’s “heartless/murderous austerity”.

Or maybe supply-side policies are unwarranted in an environment of low inflation, low unemployment and steady GDP growth.

Sure, tax cuts right now doesn’t sound like a good idea. But if they went for an across the board tax hike of 5%, raising Medicare/Social Security eligibility to 70, cutting welfare(besides SNAP/HUD) by 20%, and a federal VAT of 5-10%, the left would go crazy. It would be too complex for most to argue beyond “Balancing the budget shouldn’t require cutting funds to the poor and elderly.”

Those are radical proposals which even Ted Cruz didn't make (70 really??). And the Medicare thing has to be worse than Trumpcare & will cause deaths of & will brutally bankrupt many old people. The US is the only industrialized country not to have Universal Healthcare & the goal should be to expand Medicare to everyone, so the talk of cutting it for 65-70 year old is terrible. And 50% of 55-65 year odd people have 0 in their pockets & having nothing for retirement. US has the highest unequal distribution of wealth among seniors & has terrible poverty among people. No-one wants to give a job to a 64 year old Non-College educated guy & pay him 15$. So those are not rational proposals.

The budget argument is also fairly meaningless. It is totally irrelevant if there is a 1$ Surplus or a 50M Deficit as long as it is low. Deficits in general are good as long as Nominal GDP Growth >> Rate of Interest that the government has to pay.The current deficits of 600-700B $ are too high. Ideally it should be contained around 200-300 B $ at most & that shortfall can be made up by closing loopholes/raising taxes on wealthy by 2-3% odd.

The key is to raise the minimum wage to a reasonable level so that people are off subsidies & earn enough to contribute to the economy & help create jobs. Plus, you have to take a 1-3 $ one time Debt to finance Infrastructure which will create millions of jobs & will pay off. This is an extremely low interest rate period & a good time to borrow.

[Southern Senator North Carolina Yankee]

The key is to raise the minimum wage to a reasonable level so that people are off subsidies & earn enough to contribute to the economy & help create jobs. Plus, you have to take a 1-3 $ one time Debt to finance Infrastructure which will create millions of jobs & will pay off. This is an extremely low interest rate period & a good time to borrow.

This is correct. Though I would prefer a split of doing it half with the minimum wage and half with the EITC.

[Tartarus Sauce]

This is like the tariffs of old. The Republicans kept pushing a policy proposal that no longer was beneficial simply because they were ingrained almost in their DNA that Republicans must raise tariffs to promote industrial growth. They did it in 1890, it backfired and cost them the 1892 elections and contributed to the Depression of the 1890's. By 1900 there was an understanding forming in the business community that tariffs did not work and that was because the US was the largest economy in the world, and was the low cost manufacturer. It didn't need protection, it needed markets. Even Mr. Tariff himself, McKinley was beginning to accept this line of thinking. Then he was assassinated.

Tariffs remained part of the Republican dogma for another 30 years, until the Great Depression and the Tariffs passed to combat it, clearly and demonstrably made it worse. The Republicans were weaned off of Tariffs by the New Deal Coalition's political dominance, especially with the working class, and the business community unequivocally saying "This doesn't work!" and Republicans embraced said community in opposition to the taxes and regulations of the New Deal. Laying the seeds for the next paradigm. A Republican Party opposed to taxes and regulations, not defined by support of tariffs, eventually Free Trade would even been assimilated into the small gov't DNA as just another tax and taxes are bad.

Now here we are. We have a policy proposal that was designed to combat the economy of the 1970's being peddled again and again as the appropriate answer to the conditions almost 40 years later. We don't have a supply shock, we have a demand shortage.

I have seen so many idiot talking heads on TV. One said the reform was unimportant and he couldn't care less and all he cared about was the cuts. That a-hole Puzder was on one of the shows earlier today and he was asked about a specific regulation being cut that was benefitting business and he said "well you don't here anyone talking about raising the federal minimum wage anymore".

The Republicans need to jettison these Wall Street whores, and embrace its base by getting money out of government yes and out of Wall Street gambling and paper pushing and put it back in pockets of working and middle class Americans on Main Street. I think they should throw in a 4th bracket to shift the bulk of the benefit to the middle class, they should remove the carried interest deduction, should make hedge funds pay at least the 20% proposed corporate tax rate and instead should raise the EITC substantially, raise the minimum wage to $9.50 and do infrastructure in Spring. This gets people off of welfare and back to work in a positive way, puts money into social security and medicare and substantially reduces the risk of another Wall Street originated economic crash.

It will also set us up with policies ready to combat a recession since some lead indicators point to one starting next year.

^^^^^^^^^^^^^
This times ten.

The Republican Party is stuck between a hostile takeover of reactionary nationalists and the broken- record panaceas of an inflexible and crooked elite. This is why they are so fundamentally incapable of governing despite ostensible control of all the levers of government: the GOP base doesn't want what the establishment and its donors are selling anymore and neither do most Americans either. Of course, if they do decide to change, they'll be changing through the path of least resistance, which is currently a culturally nativist and white-nationalist politics of knee-jerk identitarian rage, which will result in huge landslide losses once the gravity of the traditional partisan framework officially collapses and is replaced by the new paradigm of doubling down on a shrinking base with appeals to anti-cosmopolitanism and anti-globalism. The result is an establishment that spends its time both chasing the boogeymen of the end of the New Deal era, which everybody else has moved on from, and struggling to come to terms with its current trajectory of transformation into the party of white identity politics and nationalism, which will utterly destroy their viability in the long run.

Not currently present is a viable path for a reformation of conservative political philosophy that repackages itself to be more in tune with the actual issues of our time, and that accepts empirical evidence as valid and vital rather than a petty nuisance to dismiss the moment it doesn't fit the narrative. That could actually save Conservatism as an abstract political standpoint that people adhere to, but Trump's alienation of Millenials and the utter ineptitude of the current GOP leaders to actually honestly address the changing times are more likely to bring their values down with them.
"Conservative" will likely get the treatment that "liberal" received during the Reagan years, where the term will get sullied for a generation and few will actively wish to associate themselves with the label. It's already something of an anathema in certain places.