Hemorrhaging Kansas: Economic Zombies rule the Sunflower State
Whatever happens, we can’t let these zombies cross the border from Kansas.
By Chris Stiffler
CFI Economist
Want a sure-fire way to capture votes for public office? Promise voters they can have their cake and eat it, too. This is what Kansas Gov. Sam Brownback did in 2012 when he promised Kansas voters that he could drastically cut taxes without having to make commensurate cuts in vital public services.
How exactly can you cut taxes and still have the same amount of money to spend on education and other building blocks of economic growth? By believing in “Zombie Economics” — dangerous doctrines repeatedly slain by the truth, yet still walking among us.
The notion that tax cuts will increase tax revenue by stimulating economic growth has been killed over and over. But that didn’t stop Brownback from running this, to use the governor’s words, “real-live experiment.” What makes this particularly scary is that these zombies are at our border.
So how did “Zombie Economics” get unleashed in Kansas? In 2012, Brownback won large cuts in state income tax rates. Another piece of legislation set in motion future cuts. When the plan is fully implemented in 2018, the top rate will have dropped to 3.9 percent from 6.45 by 2018.
This was supposed to energize the Kansas economy. But, so far, the results confirm that this zombie idea should have stayed dead. Instead of generating more tax revenue like the “Zombie Economics” theory purported, the tax cuts caused drastic shortfalls. In fact, Kansas saw the largest decline in tax collections of any state – a whopping 21.9 percent drop from the same period in 2013 to 2014, according to a new national report from the Nelson A. Rockefeller Institute of Government.
To make matters worse, employment growth in Kansas is below the national average; the state faced a debt downgrade by Moody’s and Standard & Poor’s; and Kansas lawmakers were forced to tap into the state’s reserves to fund important public services while making cuts to colleges, schools and help for struggling families.
The fallout of this zombie idea is taking quite a toll on working Kansans. A higher portion of state revenue now must be generated through sales taxes, which are borne most heavily by low-income families, since they spend all or most of their income on taxable items (compared to the wealthiest, who are able to save or invest a greater share of what they make in a year).Plus, some of the shortfall in tax receipts was filled by ending tax rebates for food and child care, again, coming down most heavily on working families.
Often the most terrifying scary movies are those whose plots the audience can imagine actually occurring in real life. As the Kansas example shows, a zombie apocalypse, driven by seemingly killed theories, can happen right next door if no one stands up to stop it in time.
This is second of three blogs for CFI’s “Zombie Economics” week. Stay tuned for the conclusion: zombies in our state capitol.
