Politicians on both sides of the aisle have long maintained that the 50 states represents the laboratories of democracy. Republicans in particular have praised the idea of giving more flexibility to states, arguing that what’s suitable for California may not be the best solution for Kansas—though exactly how education and health care are supposed to be affected by lines on a map is never made quite clear. With Republicans dominating not just the government in Washington, D. C., but state governments in many areas of the nation, they’ve been given a perfect chance to draft the perfect conservative experiment—low taxes, limited government, socially suffocating.
Only the results from all those Republican experiments … isn’t what they promised.
Something strange has been happening to taxes in Republican-dominated states: They are going up. …
Republicans, with control of Congress and the White House and a base that is growing impatient for tax reform, are trying to solve a difficult math problem: paying for critical programs like infrastructure, health care and education while honoring their promise to deliver lower taxes without exploding the deficit.
In state after state, Republican devotion to tax cuts as a solution to everything from boosting the economy to failing colleges has been put to the test. And it’s failed.
What states have discovered is what economists said all along—the Laffer Curve is simply laughable:
And now some Republicans say that what has played out in these states should serve as a cautionary tale in Washington, where their party’s leaders are confronting a set of circumstances that looks strikingly similar.
Out in Kansas, Sam Brownback continues to demonstrate Trump-level delusion as he pitches his cut, cut, cut program as the model for the nation.
“A fantastic way to go,” he said this year, urging Mr. Trump and Congress to follow suit with deep reductions to corporate and individual rates. …
After Mr. Brownback took office in 2011, he pursued a plan that included cuts and, in some cases, an outright elimination of taxes for businesses and individuals to help invigorate the state’s underperforming economy. He described it as “an experiment” in conservative governance that could demonstrate what Republicans were capable of if they controlled legislative and executive branches across the country. (He is Kansas’ first Republican governor since 2003.)
The conservative movement got behind him. The plan was approved with the lobbying muscle of the billionaire Koch brothers’ political network, which is overseen from Wichita, where one of the brothers, Charles G. Koch lives. It had the blessing of prominent conservative economists like Stephen Moore and Arthur Laffer, the Republican Party’s foremost supply-side evangelist.
But the people who have to live with Brownback’s “fantastic” results, and the politicians who answer to them, are no longer so easily fooled.
Republican lawmakers in Kansas decided that they could cut only so much without doing irreparable harm to vital services and voted to increase taxes by $1.2 billion last month. Mr. Brownback vetoed the plan, but Republicans overrode him.
Reducing taxes for the wealthy has been a part of the Republican plan for a century, but it kicked into high gear after Ronald Reagan made tax cuts a theme in two strong wins. Republicans made tax cuts not just a plank in their platform, but their raison d'être. The problem is that there was never any evidence that chopping taxes would give the results Republicans insisted.
Laffer, the guy who stepped in to cheer on cuts in Kansas, has been waving his famous napkin-sketch for thirty years, but the Laffer Curve doesn’t lack just numbers. It lacks any evidence—or even a theory that holds up to thirty seconds of questioning.
In urging the Kansas Legislature to act, Mr. Laffer and Mr. Moore said the cuts would have a “near immediate” positive impact on the economy. Mr. Brownback said the plan would pay for itself.
Yeah, but no. Instead Kansas found itself with an economy worse than its neighbors, even as its budget collapsed, public schools closed, and infrastructure crumbled. Kansas is a disaster, and the recent vote to repeal nearly every feature of the plan that Brownback and Laffer brought to the state is just the first step toward digging out of a very deep hole.
But there is some hope for Kansas. Because competing would be easier … if the federal government just wrecks all the other states.
... the parallels with Washington start to trouble those who are critical of the plan the Trump administration has laid out. The plan would slash the rate paid by businesses to 15 percent and shrink the number of individual income tax brackets from seven to three — 10, 25 and 35 percent.
Mr. Laffer and Mr. Moore, a Heritage Foundation economist, have both helped shape the president’s tax policy.
Steven T. Mnuchin, the Treasury secretary, said the Trump tax cuts would pay for themselves with the economic growth they would inevitably create.
Donald Trump is set to do for America, what Sam Brownback did for Kansas. The hole that generates may be too big for anyone to fill.