By Nick Gier
“Kansas’ tax cut was among the worst tax policy decisions of all time.”
—Forbes (July 2, 2015)
The GOP presidential candidates are bringing out the Gipper to solve the nation’s economic problems. Those who worship Ronald Reagan repeat the now familiar refrain that he gave us smaller government and lower taxes. By the time Reagan left office, however, the number of nonmilitary federal employees had increased by 238,000. In fact, these numbers also went up under the two Bushes, but declined under Carter, Clinton, and Obama.
Reagan did reduce income taxes substantially, but when his budget director David Stockman warned of huge deficits, Reagan increased taxes in 6 of his 8 years in office. The tax increase of 1982 was, adjusted for inflation, larger than the new revenue for Obamacare. The red ink was still not staunched. When Reagan took office the national debt was a little over $1 trillion, but when he left office it was $2.7 trillion, a 189 percent increase.
Even with strong evidence that tax cuts do not necessarily stimulate the economy, the GOP at the state and national level continue to repeat the mantra and its reputed magic. Republican-led Louisiana and Alabama are facing huge deficits. Alabama Governor Robert Bentley has requested $300 million in new taxes after rejecting attempts by his legislature to reduce the deficit by severe spending cuts alone. Bobby Jindal has been forced to raise taxes to close a $1.6 billion gap in revenues for his state.
Kansas is the state where the no-tax religion has been most fervently preached and practiced. Calling on Reagan but ignoring his record, Gov. Sam Brownback came into office promising a “real live experiment” to produce economic prosperity for his state.
Brownback began a “march to zero” by eliminating income taxes on 330,000 businesses and farms, promising do that for all citizens when that new revenue came to Kansas. Few new businesses came, and although the Kansan economy grew, it grew at a much lower rate than nearby, higher-taxing states or the nation as a whole. In an exercise in subtle understatement, Kansas State GOP Sen. Les Donovan admitted: “We probably overdid this a bit. The economy has not come back.”
In June Republicans in the Kansas Legislature reluctantly voted for a $432 million in new taxes, the largest increase in the state’s history. They raised the tax on cigarettes and the sales tax went from 5.7 to 6.5 percent. Kansas House Minority leader Tom Burroughs states: “We are literally increasing the cost of living in Kansas on those who can afford it least.”
As part of the budget deal, Brownback promised to come up with $50 million in budget cuts. The program most hit was SCHIP, which provides healthcare for the state’s poor children. Ironically, some of the cuts will be off-set by funds from the much maligned Affordable Care Act.
Shannon Cotsoradis, president of Kansas Action for Children, declared that “Kansas children and families continue to foot the bill for an unsustainable tax plan. We know Kansas’ youngest children have been dropping off the state’s Medicaid rolls at an alarming rate since 2012.”
Brownback once promised Kansans that his “live economic experiment” would provide new funding for education, but in February he proposed huge cuts for the state’s schools. The recent budget deal avoids most these, but school districts still have been forced to reduce school days and programs as well as running property tax elections.
The Kansas Legislature is much like Idaho’s: it has a 90-day session and the legislators draw only $18,000 in salary. There are 97 Republicans in the 125-seat House and 32 Republicans in the 40-seat Senate. As in Idaho, the Kansas GOP has purged its moderates, those in the mold of former Sen. Bob Dole. In the 2012 primary 16 moderates lost in 21 races.
Brownback and most of the nation’s Republicans all play to the tune of anti-tax guru Grover Norquist, whose March to Zero ends with a government so small that “we can drown it a bathtub.” He heaped praise on Brownback’s experiment and said that it would lead to greater prosperity for all Kansans.
Some Kansas legislators insist that they are simply reforming taxes not increasing them. In Louisiana Republicans were afraid that they would lose Norquist’s favor, but their convoluted way of increasing revenue passed muster. Ten brave Republicans, however, signed a letter to Norquist saying that the budget bill was a “phantom—purely fictional and procedural.”
Nick Gier of Moscow taught philosophy at the University of Idaho for 31 years. Read his column on Reagan at www.NickGier.com/RRmilitary.pdf and his column on the national debt at www.NickGier.com/DebtGOPObama.pdf.