With Kansas facing some tough economic decisions in the 2015 legislative session, several Republicans have decided to back away from the
Kansas model and look for a different way to approach taxation.
As Republicans nationwide look at projected budget deficits in Kansas that continue to spiral upwards, the feeling that the Brownback plan would be implemented elsewhere seemed laughable.
Tell that to Art Laffer. Laffer took to St. Louis radio yesterday to defend the Kansas tax cuts and contend we just aren't giving it enough time - and that this will all work out in the end.
http://news.stlpublicradio.org/...
Whether the plan will eventually work remains to be seen. In the meantime, the Kansas experiment has spooked other governors.
“They’re blaming it on something that had nothing to do with the tax cuts whatsoever,” Laffer said. “But you know, it is scary. And these (politicians) are not the central brigade of bold people.”
Art Laffer and Alex Sinquefield, Republican Billionaire donor, took to the airwaves to tell Missouri: Be brave. Be.. Kansas.
In a free wheeling interview, Alex Sinquefield made the case far more directly as to the positives of the Brownback tax plan. When confronted with the ramifications of the Brownback tax plan, Sinquefield was quick to point out: it isn't over yet.
http://news.stlpublicradio.org/...
But it’s not over yet, Sinquefield said.
“We’ll have to see what actually happens,” he said Tuesday. “It was an amazing thing what they actually did there, to cut taxes the way they did. To cut taxes on business, I think was a stroke of genius. The story’s not over. These things don’t happen overnight. You have to wait a few years for these effects to kick in.”
In an actual transcript of the radio show, Sinquefield's exchange sounded like this (audio within the link):
http://news.stlpublicradio.org/...
Don Marsh: Rex Sinquefield, I’ll turn to you because I know you’ve written in Forbes magazine and elsewhere endorsing what Sam Brownback has done in Kansas. That apparently has not turned out that well. In fact, they’re talking about making some revisions in what he’s done.
Rex Sinquefield: We'll have to see what actually happens. It was an amazing thing they did there to cut taxes the way they did. To cut taxes on business I think was a stroke of genius. Those are the job creators and that’s where they had a tax rate that went from I think 6.5% to 0 on the small and medium businesses. Everyone else had a tax cut but much smaller in proportion. This story is not over. These things don't happen overnight. You have to wait a few years for these effects to kick in. If you’re a businessman, say you have an office of doctors or lawyers or whatever in Kansas City, Missouri and now you learn of this. You say, “this is great, we can increase our income every year by 6% just by moving three blocks.” You can’t do it the next day. You’ve got lease obligations and things like that. But you’ll do it when you can. But these things take time.
While it's not over yet, you sometimes have to wonder when the pot at the end of the rainbow will appear. Art Laffer, testifying before the Kansas House in 2012 - almost 3 years ago to the day - contended that prosperity was just around the corner.
http://cjonline.com/...
“If it continues in the direction that he’s going, I think you can really create a state of prosperity here in Kansas,” he said. “I really believe that based on my research, my work and my personal feelings. I know the future is always more uncertain than the past, and I’m trying to do all I can to use the lessons of the past as a guidepost for the future.”
Laffer, who runs a consulting firm in Nashville, Tenn., was in Topeka to testify in House and Senate committees on the plan he helped craft, which would lower income tax rates while eliminating a host of deductions.
In the three years since,
Kansas has managed to miss revenue targets,
create fewer jobs than nearby neighbors, and of course more
people continue to leave Kansas rather than come to live.
When confronted by the public radio host about people leaving states like Kansas, Laffer had a response:
http://news.stlpublicradio.org/...
“The only ones moving into California are, well, the low-wage workers — let’s put it that way,” he said, laughing. “The people who are going to be unemployed and getting welfare.”
Most of those who are moving from one state to another are wealthy, Laffer said. “People who pay taxes care about the amount that they pay. They also find tax shelters; they hire lawyers (and) accountants. They do all sorts of things to get around taxes.”
Concluding that states lower tax rates to attract the wealthy, and the others who move those "low wage" workers are laughable and don't really factor in because they are likely future welfare recipients.
Laffer and Sinquefield concluded by leaving an open challenge to an economic debate for anyone who wants to argue with their theory:
The last chapter of “Wealth of States” is dedicated to what Laffer called “silly criticisms,” such as disagreements about how and where data was collected, and how it is presented.
“Any time one of these guys wants to have a debate with Rex or me or Travis (Brown) — we’re all three the authors of the book — we’re on for it,” Laffer said. “But they don’t ever do it for one simple reason: They don’t have the wherewithal or the ammunition to really shoot down all of the evidence we present. It’s just truckloads of it, and every which way you slice it, you dice it, you fry it, you boil it, you do everything, and it always comes out whenever you pay people not to work and tax people when they do work, you get less work.”
In Sinquefield's world, Missouri needs to take a hard look at Kansas and take the leap of faith to become that economic boom-town that hasn't quite happened yet. Whether or not Missouri Legislators follow Laffer's lead is up for debate.