October 5, 2013

DON'T TAX WHAT YOU DO WANT:

How Kansas Governor Brownback Schooled Missouri On Tax Cuts, And Showed The Region How To Grow (Rex Sinquefield, 10/04/13, Forbes)

[Kansas Governor Sam] Brownback's tax plan flattened and simplified the tax code, cut personal income tax rates for most earners from 6.45% to 4.9%, and got rid of small business income taxes.

Gov. Brownback's singular goal was to grow the economy of his state. At the time Kansas had the second highest tax burden in the region, a cash balance of less than $1,000, a projected deficit of $500 million and an unemployment rate of 6.9%. In addition, 73% of the counties in Kansas had witnessed a decline in population.

Instead of continuing to watch billions of dollars in Net Adjusted Gross Income leave Kansas to other states, such as Florida, Texas and Tennessee (all no-income tax states), the legislature and governor identified and seized the opportunity to increase its competitive advantage with neighboring states. It was a bold political move to say the least, but an idea that ultimately struck a chord with politicians, employers and workers across the state.

Just one year later, a close look at the data backs up the economic projections of Brownback's visionary leadership. Lower income tax rates have in fact stimulated the economy by reducing the price both of work and conducting business in the state, not to mention that lower rates have predictably proven effective when it comes to luring out-of-state businesses to Kansas' friendlier business environment.

A progress report issued recently by the state's former budget director, Steve Anderson, one published in the Kansas City Star, shows many indicators of improvement. According to Anderson, the state's cash balance has risen to $585 million today and they are projecting a surplus in 2014 of nearly $510 million. In addition, the unemployment rate fell from near 7% to 5.8%, as 45,000 jobs were created and the state's population grew by 27,000. All this while the state reduced the tax burden on workers to the second lowest in the region, and handed just under $250 million back to workers.

Posted by at October 5, 2013 3:32 PM
  

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