June 8, 2017
“WE HAVE gone too far to the right and are now swinging back to the centre,” says Melissa Rooker, a Republican state representative. Ms Rooker was one of the moderate Republicans who on June 6th joined forces with Democrats in the state house to override a veto by Governor Sam Brownback. The bill in question aims to raise $1.2 billion over two years by increasing income taxes and repealing a tax exemption for small businesses. In votes only a few hours apart, 49 of the 85 Republican members of the state house and 18 of the state’s 31 Republican senators voted against the Republican governor.
The veto override’s significance goes far beyond a tussle over the finances of an agrarian midwestern state. Mr Brownback is the poster boy for Laffer-curve enthusiasts who believe that lower taxes always boost growth. His radical business- and income-tax cuts, launched in 2012 and 2013, were a political and economic test of how far conservatives could push supply-side economics. Judging by the state of Kansas, the answer is not as far as they thought.
The selling points of Mr Brownback’s tax cuts, explains Duane Goossen, a former Kansas budget director, were that they would spur growth, pay for themselves and make everyone across the socioeconomic spectrum better off. Five years later, none of these promises have come true. Kansas’s economic growth has been sluggish at best, the drop in state revenue has been steep and Mr Brownback was only recently toppled from his perch as the nation’s most unpopular governor by New Jersey’s Chris Christie. “The Kansas experiment did not work,” states Mr Goossen.
Defenders of Mr Brownback argue that Kansas would be doing much better now if he had been able to implement his reforms properly. He cut marginal tax rates (which discourage work and investment), but legislators did not let him close many loopholes to pay for the cuts, which meant that the state’s revenue plunged much more than expected. “Kansas increased spending while taxes were cut,” fumes Grover Norquist of Americans for Tax Reform, a lobby group. The low-tax crusader points instead to Florida, Arizona, Texas and Indiana to prove that tax cuts done right spur economic growth.
Though a Republican state for years Kansans did not want to move as far right economically and politically as Mr Brownback was trying to push them. Earlier this year almost two-thirds of respondents said in a “Kansas Speaks” survey by Fort Hays State University they felt Kansas was on the “wrong track”. At the primary elections in 2016 moderate Republicans ousted many of the conservatives aligned with the governor.
The parliamentary newcomers, who account for about one-third of the Kansas legislature, helped to scupper Mr Brownback’s tax agenda. In February lawmakers came within a few votes of overriding the governor’s veto of a tax increase that would have raised more than $1bn to help plug the budget shortfall. In March came another blow when the Kansas Supreme Court ruled that the state’s spending on public education was unconstitutionally low. It may not come as a big surprise that the beleaguered governor is reportedly in talks with the Trump administration about a new job.
Read more from The Economist here.