May 15, 2017
Kansas offers a cautionary tale for what President Donald Trump’s tax plan could do to the federal budget.
Duane Goosen, the former Kansas secretary of administration, said Trump’s plan gave him the shivers because of its “unbelievable” similarities to policies that ruined his state’s budget, reported The Guardian.
Treasury secretary Stephen Mnuchin and chief economic adviser Gary Cohn last month unveiled the plan, which borrows heavily from the “supply-side” theory that has influenced Republican tax policies since economist Arthur Laffer sketched it on a cocktail napkin for Dick Cheney and Donald Rumsfeld in 1974.
Kansas Gov. Sam Brownback promised voters that his business tax cuts would pay for themselves and benefit everyone with a “shot of adrenaline” to the state’s economy.
But that’s not what happened, Goossen said.
“We are a cautionary tale,” he said. “It sounds great, everybody gets a tax cut and it’ll balance – but it just doesn’t work.”
Goossen, now a senior fellow at the Kansas Center for Economic Growth, said the money went to a small group of wealthy residents and left the state budget with a $1 billion shortfall.
The school system, after yearly budget cuts, has gone from one of the nation’s best to one of the worst.
Brownback’s plan — like Trump’s — promised to spur growth for limited liability companies, which would, in theory, create new jobs.
The state has about 110,000 more LLCs, but that growth hasn’t boosted hiring.
The state has added just 12,400 private-sector jobs since 2014, far fewer than the 100,000 Brownback promised during his re-election campaign, and that job growth hasn’t kept pace with the state’s neighbors.
“There is no evidence whatsoever that suggests this plan worked,” Goossen said.
Laffer agreed the situation “sucks” in Kansas, but told The Guardian that lawmakers should have cut taxes even more.
“When you put an atomic bomb on a place it will materially change the place – but a cherry bomb probably won’t change the buildings or anything else,” Laffer said.
Read more from Raw Story here.