December 17, 2015

Debunking “Lost Decade” Argument

2012 tax cuts that hurt Kansas economy based on misleading claims

Analysis of data from 2000 to 2010 contradicts references to a “lost decade” of statewide economic decline, a position used to support an unprecedented and unaffordable tax plan

TOPEKA – After policymakers enacted a plan to slash Kansas’ state income tax in 2012, it has failed to create promised jobs, worsened the state’s economy, and resulted in a perpetual budget crisis. A new report by the Kansas Center for Economic Growth (KCEG) finds the now failing plan was pushed through the Kansas Legislature based on misleading assertions that the state’s economic performance from 2000 to 2010 (frequently referred to as the “Lost Decade”) necessitated an overhaul of Kansas’ tax structure. This reference is now also utilized to support the continuation of this tax plan as a needed step toward economic recovery.

KCEG’s report, “The Lost Decade,” examines these claims and finds they misrepresent economic data from that period.

Among the report’s main findings:

  • Kansas’ total job loss figures from 2000 to 2010 fail to depict an accurate picture of what happened throughout the entire state economy. Almost half of Kansas’ job loss was concentrated in Wichita and was related to economic trouble in the airline industry – an unavoidable national trend. The job market fared better in other parts of the state; Kansas City, Kansas, for example, saw a net gain of over 15,000 jobs during the same period.
  • From 2000 to 2010, average wage and salary growth in Kansas – both total and private sector – exceeded the national average.

“Marking this period as a ‘lost decade’ misrepresents what really happened to justify a soundly disproven approach to growing the state’s economy,” said KCEG Executive Director Annie McKay. “When used as a reason to double down on a failed experiment, these misleading claims cause even more problems.”

Not only was justification for the 2012 tax changes based on misrepresented statistics, but KCEG’s analysis of economic data reveals worsening trends since the tax plan took effect.   

  • Despite exceeding the national average from 2000 to 2010, wage and salary growth has continued to lag national and regional averages since 2012.
  • Kansas’ share of the national economy has declined since the tax cuts were enacted and is now lower than the state’s average share between 2000 and 2010.
  • Kansas’ recovery from the Great Recession has consistently lagged behind the entire nation and our six-state region in both total and private sector job growth.

“Kansas’ approach to tax policy should be balanced and sustainable, but, most importantly, it should be built on facts,” said McKay. “The facts clearly show Kansas was better off before the 2012 tax plan. The lost decade we need to worry about is the one we’re losing right now.”

Read the entire The “Lost Decade” report here.

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ClayDebunking “Lost Decade” Argument: 2012 tax cuts that hurt Kansas economy based on misleading claims