Supply-side (or trickle-down) economics, the only economic plan the Republicans have had for the last four decades, claims that if you lower taxes you’ll boost the economy so much that it will boost tax receipts enough to make up for the lost revenue. That has never been true and here’s yet another example of it in Kansas, where reality has shown the exact opposite of what Republicans predicted.
In 2012, Kansas governor Sam Brownback signed a massive tax cut into law, arguing that it would boost the state’s economy. Eventually, he hoped to eliminate individual income taxes entirely. “Our place, Kansas, will show the path, the difficult path, for America to go in these troubled times,” he said.
National conservative activists raved. Patrick Gleason of Americans for Tax Reform said Kansas was “the story of the next decade.” The Cato Institute praised Brownback’s “impressive” tax cuts and gave him an “A” on fiscal policy. And the Weekly Standard’s Bill Kristol said that, if reelected, Brownback would be “a formidable presidential possibility.”…
After the cuts became law, it was undisputed that Kansas’s revenue collections would fall. But some supply-side analysts, like economist Arthur Laffer, argued that increased economic growth would deliver more revenue that would help cushion this impact.
Yet it’s now clear that the revenue shortfalls are much worse than expected. “State general fund revenue is down over $700 million from last year,” Duane Goossen, a former state budget director, told me. “That’s a bigger drop than the state had in the whole three years of the recession,” he said — and it’s a huge chunk of the state’s $6 billion budget. Goossen added that the Kansas’s surplus, which had been replenished since the recession, “is now being spent at an alarming, amazing rate.”
It did nothing to boost growth. In fact, Kansas trails the rest of the country in economic growth. And it dropped state tax revenue by more than 10% of the entire budget. And now Brownback’s approval ratings are lower than Obama’s, as they should be. This economic theory has never worked. The result is always the same — lower revenue and higher deficits, as anyone who can do basic math can predict.