KS legislature for the win!

June 8th, 2017 at 8:09 am

Really happy to see the Kansas legislature reject the predictably failed supply-side tax cut “experiment” that’s been whacking the state’s coffers since 2012. Over at WaPo but one extra note here.

I’ve heard some supporters of the cuts–and there are surprisingly few, which I consider another gain for humanity–argue: “But KS is adding jobs; GDP is up; just give it a chance!”

This is absolute gibberish. It is a completely meaningless defense. We are in year eight of an economic recovery. Job growth is up most everywhere, in places that have raised their taxes and lowered them. In fact, if you want to get technical, economic indicator in KS look like nothing special compared to the nation.

The only thing you can be sure of re tax cuts is the first order effect: revenue losses. Beyond that, linkages between tax changes and growth are 98.8% phony rhetoric, 1.2% ambiguous economics. The KS legislature learned that the hard way, but at least they learned it.

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2 comments in reply to "KS legislature for the win!"

  1. Tom Cantlon says:

    They’re going to raise taxes (therefore services, and investments like education and state infrastructure) about back to where they were to end the damage. If this were not a political question, e.g., the antibiotics were keeping the patient alive but not healthy, they were reduced and the patient got worse, the objective question would be, is back to the previous level the right point? If the patient did better with more, would even more be even better? Maybe, maybe not, but it would be the obvious question. Since it’s a political question, it won’t be asked.

  2. John Wilkins says:

    However, you know very well that state, local government, household and firm’s budgets are not remotely like the federal government’s. You also know that tax cuts in general are stimulative, but not as stimulative as spending increases. State, local governments, households, firms (and Greece) are all currency users. As currencies users thay can all run out of money.

    But there is no lesson in Kansas for the federal government. The federal government is the sole, monopoly creator of the fiat currency. As long as the US government does not borrow in foreign currencies, there is no possibility of “running out of the money” it alone creates.