Kansas Income Tax Cuts: Boom, Bust, or Wash?
March 28, 2014
Yesterday, the Center on Budget & Policy Priorities (CBPP) attacked the recent tax cut package in Kansas (which changes the three-bracket 3.5%/6.25%/6.45% income tax into a two-bracket 3.0%/4.9% income tax, and perhaps even lower if revenue growth exceeds a stated threshold). The CBPP report argues that Kansas is not a model because cutting taxes has reduced revenue by some $800 million per year, led to lower spending growth, cut income taxes primarily for those who earn high incomes, won't grow the economy in the long-term, and haven't boosted the economy so far.
The first four of those five critiques are rhetorical and unrelated to actual evidence, or they were purposes of the bill (such as reducing revenue). Indeed, it would be news if CBPP ever said anything positive about income tax cuts. Their fifth point rests on an analysis that Kansas is growing jobs, but more slowly than some other states. Hardly damning.
For our part, we have criticized how the Kansas tax cuts were structured, especially the lack of base broadening and the new loophole for pass-through businesses. The verdict is not yet in on whether the Kansas cuts are a boom, a bust, or a wash.