Opinion

This architect of Kansas’ tax policy failure mocks our state. Leaders can’t ignore recent history.

November 21, 2022 3:33 am

Arthur Laffer, who received the Presidential Medal of Freedom in 2019, is consider the father of supply-side economics and served as an economic adviser to Gov. Sam Brownback. Laffer's devotees insist that tax cuts for the rich boost economic growth, but Brownback's "experiment" showed otherwise. (Getty Images)

For the better part of a decade, Kansas government has been consumed by tax policy. Residents first endured former Gov. Sam Brownback’s “experiment,” which resulted in yawning deficits, budget cuts and credit downgrades. Teachers fled. Prisoners rioted. State agencies crumbled. Arduous years of rebuilding followed, under the guidance of Gov. Laura Kelly and a more responsible Legislature.

Taxes and revenue aren’t a joke for Kansans.

But one of the architects of that failed policy has the gall to laugh at us.

“When your biggest criticism of me is Kansas, I mean, come on,” economist Art Laffer told the Washington Post this month. “What the hell is Kansas? There was no cataclysm. It was boring old Kansas before and after.”

Laffer, if you didn’t know, helped popularize the whole idea of supply-side economics. Broadly, that’s the discredited concept that cutting tax rates on wealthy people and rich businesses will stimulate the economy and actually increase government revenue. By extension, that growing economy will help middle-class and poor people.

This optimistic-to-the-point-of-delusion policy earned it unforgettable nicknames: “trickle-down economics” or “voodoo economics.”

Laffer earned $75,000 for consulting on the Kansas tax plan. Rather than apologize, rather than beg for forgiveness, he decided to mock us. (A tip of the hat to my friend Joel Mathis, columnist for the Kansas McClatchy papers, who spotted this diss first.)

Kansans have weighed in. The midterm elections showed the state doesn’t want unified GOP government. The last such combination of right-wing governor and Legislature created catastrophic  revenue reductions. Brownback didn’t end up with economic growth or a victorious presidential campaign. Instead, he earned the second-lowest approval ratings of any governor in the United States.

Or as Michael Mazerov of the Center on Budget and Policy Priorities wrote in the definitive account of the disaster: “The dismal results of the 2012-17 Kansas experiment are consistent with the majority of academic studies on the relationship between state personal income tax levels and state economic performance — and with the experience of most states that have pursued similar policies.”

Determined tax-slashers — inside and outside Kansas — might want to examine that record before spreading their unholy gospel further.

 

Supply-side lovers

The religion still has its disciples, of course.

Rich people and GOP politicians alike adore supply-side economics.

Why wouldn’t they? Under the theory, society’s wealthiest pay less in taxes while anti-government Republicans amass examples of dysfunction. The wealthy assuage their guilty consciences by telling themselves they can do more good by making more money. The politicians can point to underfunded and underperforming services as a reason to privatize them. Both groups benefit while the rest of society suffers.

Tax revenue supports vital infrastructure, social services and public safety. Without contributions from everyone, including the wealthy, the system shudders to a standstill. While supply-side plans supposedly increase tax collections, they seldom produce the promised boost.

No one likes to pay taxes. But we rely on pothole-free roads. We depend on quality schools. We require a functioning government.

The destructive dogma endures for another reason. Like the best lies, it has a tiny basis in truth. I wouldn’t be intellectually honest unless I explained why.

Think of it this way. If the government taxes a wealthy person’s income at a 99% rate, you might expect them to work less or move their assets to another country. Lowering that exorbitant rate to, say, 60% would likely encourage rich people and businesses to make more money and contribute to the broader economy. The Beatles, of all folks, explained this in their 1966 song “Taxman.” (“There’s one for you, 19 for me,” sings the tune’s villainous narrator.)

The long-term problem with this example is that if you’re dealing with a few percentage points of tax rate in the teens or 20s, few people or businesses are likely to radically change their behavior. States usually tax at a lower rate than the federal government. In Kansas, for instance, Brownback was reducing from a top tax rate of 6.45%. For the wealthiest, that’s essentially a rounding error. At the same time, government will see an immediate and radical reduction in revenue.

This hits close home to me professionally. Between my time at the Topeka Capital-Journal and Kansas Reflector, I spent four years at Kansas Action for Children as communications director. This advocacy group doesn’t just speak up for the littlest Kansans; it also promotes balanced tax policy. Brownback’s policies — and Laffer’s — didn’t just weaken our state.

They nearly destroyed it.

 

No magic reaction

What surprises me after all this time isn’t simply that Laffer laughed at Kansas. That might be expected from someone devoted to selling a single, defective product.

What shocks and stuns me is that Kansas leaders still listen to this man.

Take a look at U.S. Sen. Roger Marshall, who welcomed Laffer to his “Ag Talk” video series last month. The two compared the economy under President Reagan and President Biden (not favorably), condemned inflation and hyped up free trade’s benefits for farmers. The economist also suggested that voters take a different approach in the midterms.

“People deserve the governments they get, senator,” Laffer told Marshall. “You know, the Earth these people are scorching is their Earth too. And, you know, we’ll see if the electorate has wisdom this November, changes it. Maybe they will, maybe they won’t. I don’t know. I’m not an expert on that. But it reminds me a lot of Jimmy Carter in 1978. And then, you know, Ronnie came on the scene and we really restored America’s prosperity.”

Voters in Kansas did take history into account. But neither Laffer nor Marshall addressed the Kansas “experiment” during the entire 19 minute and 41 second segment. Somehow, it slipped their minds.

Marshall laid it on thick while closing his show.

“I appreciate you sharing your wisdom with us today,” the senator said. “I learned something every time you come to Capitol Hill and we’re able to sit down with you.”

My suggestion? Marshall should think twice before taking any lessons from Laffer. He should know, and voters in this state already know, what happens when you cut taxes without plans to make up for lost revenue. Slashing tax rates doesn’t generate some magic reaction. It makes the rich richer and the poor poorer while hobbling social services. Decades of failure and stunted economic growth prove it’s a dead end.

With Kansas marking 27 months of surplus tax collections, legislators will be sorely tempted next session. They will want to believe the false religion preached by Laffer and his acolytes. They will want Kansans to forgot what happened during those dismal years as Brownback’s dream turned into a nightmare.

Don’t forget.

And don’t laugh.

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Clay Wirestone
Clay Wirestone

Clay Wirestone has written columns and edited reporting for newsrooms in Kansas, New Hampshire, Florida and Pennsylvania. He has also fact checked politicians, researched for Larry the Cable Guy, and appeared in PolitiFact, Mental Floss, cnn.com and a host of other publications. Most recently, Clay spent nearly four years at the nonprofit Kansas Action for Children as communications director. Beyond the written word, he has drawn cartoons, hosted podcasts, designed graphics, and moderated debates. Clay graduated from the University of Kansas and lives in Lawrence with his husband and son.

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