re: Curious as to board’s opinion on KS austerity...

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The ideas that the Kansas cuts were a disaster is a fallacy.

However they could have been more incremental

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I think it seems fair to say a number of causational and correlational things happened in Kansas after the Tax changes and austerity:

- Clearly, GDP did not increase in a measurable way (nor clearly decrease), and job creation did not see a significant effect positive or negative.
- Actual take-home income of Kansians did increase proportional to the cut.
- The cuts caused a deficit in the state budget, and the state government failed in its efforts (so far) to make ends meet.

I think it's easy to conclude that the tax changes did not have the stated effect of boosting the local economy. Not every economy reacts the same way to the same legislation. This doesn't mean that cutting taxes cannot spur economic growth, because extreme cases of this can be found in other countries and areas, with clear causational relationships. However, it's not a guarantee, like any regulation change.

I'd say it would be reasonable to assume that in Kansas's case, because of the specific way the regulation changed, money was not being freed up to spend on goods and jobs in Kansas, but rather likely went to the business owner's personal 401Ks or savings funds instead of sitting in their business bank account. This may have had some localized benefits in some areas, but I'd assume it to be minimal as far as the state economy was concerned.

Kansas is a small economy centered on agriculture and aviation manufacture, and the only thing that is going to give their economy a boost in jobs or GDP growth is price or demand increases in those industries. Any tax increase is unlikely to 'help' in the long run either, considering exceptions and subsidies would very likely be carved out for agriculture and aviation, which would leave existing structures intact but retard growth in any nascent sectors that may be considering the state for expansion.

Well said.

Wait, so it is disingenuous to cite that more and more new businesses were started in Kansas every year since the tax cut? Wouldn't that largely be THE POINT of a tax cut? Isn't the purpose to spur increased business investment and employment? Wouldn't those new businesses then be employing more people? How is that disingenuous?

If it were just people "incorporating themselves", why did small business employment increase dramatically?

Also, wouldn't citing the massive reduction in commodities prices strengthen the argument that tax receipt decline was inevitable independent of the tax cut?

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Wait, so it is disingenuous to cite that more and more new businesses were started in Kansas every year since the tax cut? Wouldn't that largely be THE POINT of a tax cut? Isn't the purpose to spur increased business investment and employment? Wouldn't those new businesses then be employing more people? How is that disingenuous?

If it were just people "incorporating themselves", why did small business employment increase dramatically?

Also, wouldn't citing the massive reduction in commodities prices strengthen the argument that tax receipt decline was inevitable independent of the tax cut

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My response was not to your edit that added commodity pricing, but I’m gonna come back to that. The argument of Brownback was that trickle down economics through enormous tax cuts for the state, primarily on the wealthy and corporations, would in his words, create an adrenaline shot of growth that would actually increase revenues and produce no less than 100,000 new jobs. None of that happened. Growth grew but slower than his neighbors, job creation fell far short of promises, and revenue dropped notably.

It is beyond disengenuous to point to a loophole, which encourages people to incorporate as a way to avoid taxation, as some roundabout evidence to that disproven hypothesis.

As for commodity prices. I am not sure what you want me to do with that? My contention was with you claiming that without the tax cuts, revenue would of been far worse. Not sure how showing a drop in commodity prices proved that argument?

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The Tax Cuts actually helped stimulate investment which helped to somewhat offset the losses and helped the economy to recover faster than it would have otherwise.

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I guess what I’m trying to figure out here is what evidence did you look at to draw that specific conclusion? And can you share it?

Because commodity prices don’t really tell us much other than the price of that commodity dropped.

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Because commodity prices don’t really tell us much other than the price of that commodity dropped.

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Kansas is an agricultural state.
Their largest industry (ag) makes money by selling agricultural products (wheat, barley, and corn mostly). Tax receipts at the state level are based on sales and income. If the price they get for their product suddenly is cut in half, that means their income is cut in half and their sales of that product are cut in half.

Lower commodities prices>lower incomes for farmers and lower sales receipts>lower collected income and sales taxes>budget deficit.

For example, let's say I am a rancher. I sell cows for $500 each. I make $80k/year by selling 200 heads of cattle with $20k of expenses. With a 6% income tax and a 10% sales tax, the government makes $4.8k from my income and $10k from the sales of my cows.

If the price drops from $500/head to $250/head, my income drops from $80k/year after expenses to just $30k/year. Thus, the government's share of my income drops from $4.8k to $1.8k, and their cut of sales drops from $10k to $5k.

Not only can I now not afford to pay my ranch hand, but the government is now going to have a funding problem. Their tax receipts from my activity just dropped from $14.8k to $6.8k, a 55% decrease in tax reciepts. That creates a massive ripple effect in the economy and in tax receipts state wide.

Agriculture is around 45% of Kansas's economy. If the value of their products is cut in half, that would result in an up to 25% reduction in tax receipts state wide!

Obviously, I am simplifying the numbers somewhat, but you can see how large of an impact this could have.

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Because commodity prices don’t really tell us much other than the price of that commodity dropped.

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One of your dumbest statements....EVER!! (And that's really saying something....)

The reason WHY a commodity's price drops (or increases) tells us beaucoup.

Before he became Chairman of the Federal Reserve Board, Alan Greenspan got rich (and famous) by being able to predict commodity prices using economic data he would analyze.

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Slowing rate of expenditure growth is considered a cut in liberal land

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I really believe bonhoeffer45 thinks this is true. There's no other explanation for that stupidity.

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Although technically it could be considered true, IF the rate of expenditure growth is lower than the rate of inflation.
With government spending on programs this is almost never the case though.

The problem with 'austerity' in Kansas was that there wasn't any. Brownback cut taxes but allowed government spending, particularly on the failed public school system to grow unchecked resulting in deficits. The other major problem was that on a percentage basis Kansas state tax rates represented a relatively small percentage of Kansans total tax burden compared to federal income, medicare, and social security taxes...too small a percentage to see laffer curve effects come into play.

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The problem with 'austerity' in Kansas was that there wasn't any. Brownback cut taxes but allowed government spending, particularly on the failed public school system to grow unchecked resulting in deficits.

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He didn't allow anything. He and his legislature signed into law reforms of their state education system that would have cut spending dramatically, but the act was struck down as unconstitutional by the Kansas Supreme Court.

You can't say they didn't at least try to cut spending.