March 26, 2018

Paper tells true history of commodity price drops, tax policy and the Kansas economy

Topeka, KS — As the Kansas legislature works to adequately fund schools and lawmakers prepare their re-election campaigns, our state should be on the lookout for false narratives.

A new paper from the Kansas Center for Economic Growth takes on former Governor Sam Brownback’s claim that his radical supply-side tax “experiment” was undermined by drops in commodity prices. Although such drops occurred, they simply didn’t have that effect.

The paper shows that:

  • While agriculture is important to Kansas, farm income plays a bigger role in the economy of other nearby states, and they didn’t see the same budget difficulties.
  • Severance tax receipts from the energy sector fell, but they were a minuscule part of overall state revenue.
  • The drop in commodity prices didn’t hit Kansas hardest until two years after the passage of the Brownback tax plan. The state’s budget was already in free fall at the time.

“Looking at the numbers, it was clear that declines in the farming and energy sections weren’t enough to cause Kansas’ budget problems,” said KCEG assistant research analyst Michael Raven. “The Brownback tax cuts were the principal cause.”

As Kansas lawmakers look ahead, it’s clear that they should focus on reliable and sustainable sources of revenue to fund important priorities. Great schools, affordable health care, solid infrastructure, and thriving communities don’t happen by magic — they take continued investment and a clear understanding of history.

Read the full paper here at KCEG’s website.

ClayPaper tells true history of commodity price drops, tax policy and the Kansas economy