You may recall from Kansas Governor Sam Brownback's (R) "State of the Union State" address that he noted that the benefits of his tax-cutting programme might be delayed, though he intended to continue moving the state income tax toward zero.
Governor Brownback has decided now, in the face of Kansas's massive budget shortfall, to levy new taxes. Not income tax of course, but the sorts of excise taxes that are both regressive and fall disproportionately on the poor and lower middle class.
Why this is going to be an even bigger fail is below the blowing orange tumbleweed.
To our new Nebraska Governor Pete Ricketts (R), take note. Kansas is showing you how to blow up a state government. Please take this as an object lesson and don't do the same here.
The Associated Press reports via Huffington Post, that Mr. Brownback intends to raise the cigarette and liquor taxes.
He proposed increasing the cigarette tax to $2.29 a pack from 79 cents and raising the tax on other tobacco products to 25 percent from 10 percent. The tax paid by consumers on beer, wine and liquor at liquor stores would jump to 12 percent from 8 percent. The increases would raise $394 million over two years, starting in July.
Thomas Koehn, a 49-year-old unemployed Topeka resident, estimated that the cigarette tax increase would cost him $50 a month. Ruby Tate, a 47-year-old cashier at Discount Smokes and Convenience Store in central Topeka, said the proposals would hurt people on fixed incomes.
"Do you cut back the smoking or do you cut back the medicine?" she said. "A lot of people are going to make the choice of the medicine."
Sin taxes (that is, cigarettes and liquor) are generally easier to push through; cigarette taxes especially, as the majority of people do not smoke.
Now we can argue about whether the poor should smoke (I do, though I know better), but the fact remains the taxes are regressive (they cost the poor a larger percentage of their income than the rich).
This will also cause another entirely foreseeable problem: anyone living close enough to Kansas's borders with Missouri, Oklahoma, Colorado, or Nebraska will simply go to those states to buy those products and smuggle them into Kansas. Kansas is not that large from north to south.
It will cause a third foreseeable problem, not necessarily for the health of Kansas residents but the health of Kansas's already stretched budget: A certain number of people will choose to quit smoking or drinking. The net result will be a fall in tax revenues on both cigarette and liquor taxes. Worse, the majority of Kansas's populace lives in or near Kansas City, Kansas. Missouri has the lowest cigarette tax in the nation at 17¢.
Nebraska, Colorado, and Oklahoma will all be lower if Kansas raises its taxes. I guess he is gambling on the Laffer Curve, betting that the loss of sales from cigarettes and liquor will be made up by increased revenues. That might be true if Kansas were the only state in the Union.
We see again, like New Jersey, and Pennsylvania, and North Carolina (insert another conservative run state here) how these "race to the bottom to attract business policies" actually work. They don't, though they are very effective at breaking government (another apparent GOP goal).
Meanwhile, California, with its much higher tax rates has both booming businesses and its government is flush with cash. Both Governor Perry (R) of Texas and Governor Brownback have tried to attract California businesses with their low tax philosophies to no avail.
As it turns out, businesses need government services too. They need good roads (and both Kansas and Texas are grinding up their paved roads because they cannot maintain them), good schools (both to attract and retain employees with children, and to hire an educated workforce), and other socialistic things provided by governments (like fire departments and police).
The governor's proposals also would divert funds for highway projects to general government programs and delay the elimination of a long-term funding gap in the pension system for teachers and government workers. Overall state aid for public schools would remain flat through June 2017 — with higher spending on teacher pensions.
Might as well start grinding up Interstate 70. I am surprised he didn't propose raising the toll on the Kansas Turnpike. (That might be in the works, or that might disproportionately affect the wealthy, in which case that would be off the table.)
Oh, and on the subject of police, with Attorney General Eric Holder abandoning the Federal Asset Forfeiture programme, that will cut into Kansas's police funding.
The state has cut its top personal income tax rate 29 percent and exempted the owners of 191,000 businesses altogether. Those changes would remain in place.
However, future cuts would be slower. For example, the state's lowest income tax rate, now 2.7 percent, was set to drop to 2.4 percent for 2016 and would dip to 2.66 percent instead.
Also, deductions that were phased out as rates dropped would be eliminated more quickly, including a popular one for interest paid on home mortgages.
Let's see: keeping businesses exempt whilst eliminating the home mortgage exemption. That ought to sit well with Kansas homeowners.
The Democrats in Kansas's legislature say they are waiting to see exactly what the proposals are before they respond. When they do, they ought to point out the question that should be on every Kansas resident's minds: Why do the Koch Brothers' businesses in Kansas get to be tax-exempt while the state takes away my home mortgage deduction, grinds up my roads, guts my schools, &c?
It would seem that the only business that will be booming in Kansas (aside from Koch Industries) will be that of one-way trailer rental companies, as anyone with enough money to escape does.
I'm surprised conservatives in my state haven't suggested erecting a wall along the Kansas line to keep out migrants. Building fences to keep out migrant workers seems to be a conservative theme.
Jeff Glendening, state director of the anti-tax group Americans for Prosperity, said that under the governor's plans, movement toward eliminating income taxes "has slowed to a crawl."
Huffington Post got that wrong; it should be "Koch Brothers Astroturf anti-tax group."
I really hope someone on my state governor's staff reads Daily Kos if for no other reason than to keep him informed of what the loyal opposition is talking about. Please don't do this to us too. Former Governor Heineman (R) backed down from Kansas's idea when businesses came out against it. Do yourself a solid and follow what he did in this area. We already have enough gravel and primitive roads here in the Panhandle.
4:04 AM MT: Gotta get to bed. Off to Colorado in the morning to go to a Skepticamp conference in Fort Collins. I will catch up with the diary after I return. (Not trying to post a hit-and-run diary here.)