State of Kansas Finances

[shocka khan]

The problem with the tax cut is the blind assumption that we were on the right-half of the Laffer curve, and the refusal to change once that was shown to be the case. We could have used reason and evidence to figure out an optimal tax rate, or adjusted the experiment once our hypothesis (cut taxes = more income) was proven false.

The Laffer curve exists, but the Reagan, Bush, and Brownback tax cuts have shown that we are not on the right-half of the curve. Each time we cut taxes, we cut revenue. This is clear evidence that our current tax model is on the left side of the Laffer curve.

That doesn't mean we should raise taxes by itself, it just means that raising taxes will raise revenue. But it does mean that cutting taxes while raising spending (with the assumption that tax cuts raise the money) is economically foolish. Continuing to cut taxes while raising spending is even more foolish, and ignoring the fact that the state continues to come in under budget is more foolish yet.

Obviously taxes are more complex than "more money raised = good" and the goal of the government is not to extract the most money possible. There are legitimate arguments for high or low taxes or taxes of this form or that form.

There is no legitimate argument for simply setting taxes low and ignoring the impact to the budget. That creates unplanned deficits and shortfalls for absolutely zero reason or upside. Low taxes could be good for all sorts of reasons (less administration needed, more incoming business) but "higher government revenue" is simply not one of those reasons, and acting like it is has cost Kansas and the US.

You are absolutely correct. Unfortunately, Arthur Laffer does not agree with you. That's why I think Laffer is a numbskull.

Just as unfortunate, the citizens of Kansas will have to clean up the elephant poop after Brownback's parade is over.

If Trump rewards Brownback for this failed experiment, they are both political flunkies. Brownback ought to be retired and his failed legacy should be forever etched in stone in case the citizens of Kansas ever forget.

Great post!