Tuesday, March 14, 2017

Why Brownbackistan's Fiscal Implosion is Bad News for Trump


motherjones |  An ambitious effort by a Republican governor to drastically cut his state's taxes is crumbling—and that's a bad omen for Donald Trump and Republicans in Congress who are hoping to slash tax rates at the national level.

Shortly after he became governor of Kansas in 2011, Sam Brownback went to work on rewriting the state's tax code. Together with the Republican-dominated legislature, he eliminated the top income tax bracket, lowered everyone else's income tax rate, and created a loophole that allowed some business owners to pay no state income taxes at all.

Brownback sold the cuts as a way to jolt the Kansas economy to life, promising major job growth thanks to the lower tax rates. To pass these tax measures, Brownback worked to replace moderate Republicans in the legislature who opposed his ideas with true-believer conservatives. He helped knock off nine moderate Republican incumbents, and the effort paid off when his tax reform passed in 2012.

But instead of the miracle growth that Brownback promised, the tax cuts have left a widening crater in the state budget. State economic growth has lagged behind the national pace, and job growth has stagnated. Lawmakers have been left scrambling each year to pass unpleasant spending cuts when tax revenue comes in below expected levels, leading to contentious fights in the legislature and state courts over reduced public school funding. When the state legislature convened last month, it faced a $320 million budget shortfall that needed to be closed before the end of the current fiscal year in June—and a projected additional $500 million shortfall for the next fiscal year.

After more moderate Republicans joined the GOP-dominated legislature following last November's election, the party has appeared more willing to concede defeat and ditch Brownback's tax experiment. Last week, the state House and Senate passed a bill that would generate more than $1 billion by eradicating most of Brownback's reforms. It would raise personal income tax rates (though still not as high as the pre-Brownback rates) and end the loophole that has allowed 330,000 business owners—including subsidiaries of Wichita-based Koch Industries—to avoid paying income taxes.