Republican Governor's Radical Tax Cut Plan Backfires, Exposes Conservative Economics As a Scam
“It’s like shooting adrenaline into the heart of growing the economy.” That’s how Sam Brownback, then governor of Kansas, described his radical tax cut plan in 2012. He was evangelical about it. Slashing corporate and personal income tax rates and completely eliminating taxes on limited liability companies, he promised, would create tens of thousands of jobs and bring prosperity to the state.
It did not work out that way.
At first, there were many believers, including the Kansas State Legislature, which passed the governor’s revolutionary tax package in 2012. Some 330,000 independent business owners took advantage of their new tax exemption. Corporations and individuals enjoyed their income tax cuts and refunds. The result was a $700 million loss in revenue for the state the first year the tax plan went into effect.
For the next five years, as revenue continued to tank, the state found itself mired in fiscal crisis, and job growth was anemic compared to the national recovery. Last year, a bi-partisan majority in the legislature essentially repealed the entire Brownback tax package.
Brownback had won a landslide victory in the 2010 gubernatorial race and was re-elected in 2014, though by a thin margin. Early this year, the Trump administration nominated him as U.S. Ambassador-at-Large for International Religious Freedom and pushed his confirmation through the Senate. But by the time Brownback resigned as governor at the end of January 2018, his “Kansas experiment” had been shelved.
Filmmakers Melinda Shopsin, Paul Lovelace and Jessica Wolfson were curious about what Brownback had left behind. Crisscrossing the heartland state (population just under three million), the crew wanted to hear what ordinary Kansans thought about their state’s experiment in tax policy.
“Our focus was to talk to regular people and get away from the divisive political rhetoric that has been so prevalent in this debate over taxes,” says Shopsin, who directed the video, which you can watch here:
Where better to start then than the Fraternal Order of Eagles Lodge in Manhattan, Kansas, on bingo night?
“The [tax] policies, in my mind, they were the same old trickle-down theories,” one bingo player opines. “Cut them at the top and it will trickle down to the bottom, and in the past four years that has not worked.”
But what surprised the filmmakers most was how many Kansans they spoke with were unfamiliar with the details of Brownback’s tax plan. “Taxes don’t bother me, unless they raise taxes,” was a common refrain. A lot of people they encountered just hadn’t been paying much attention until state budget cuts delayed highway repairs, threatened hospitals with closure and compelled some schools to close on Fridays.
On the other hand, the filmmakers found that people who did follow the news and were knowledgeable about state tax policies had developed a deep appreciation for the importance of tax revenue.
“When the funding disappeared for things people really cared about, especially public education and medical care, they told me they really began to think about the importance of where their tax dollars went,” Shopsin recalls.
“Yikes!” was fifth grade teacher Sherry Owen’s response to the discovery that the state was drastically reducing funding to the schools in her small town of Caney, Kansas. There were staff cuts, fewer supplies and finally no classes at all on Fridays.
“Our school is our center in our town,” Owen declares. “What are we thinking pulling those resources?”
There are, of course, citizens who benefited from and still believe in the corporate and individual income tax cuts. One company, Wenger Manufacturing, says they saved $18 million from the tax cuts and have re-invested the money in new technology and jobs. But these days, Shopsin reports, it’s not easy to find people willing to defend the cuts. “What we mainly heard from people, even from those who benefited from the cuts personally, was that the overall policy was a failure and how unfair these cuts were in practice.”
For example, says Shopsin, “Many doctors and lawyers were exempted from income tax because of their pass-through businesses, while their secretaries and nurses still had to pay.”
The most poignant segment of the short video is a visit to Stormont Vail Health, a hospital in Topeka, Kansas. On top of his tax cuts, Gov. Brownback had also pushed to privatize the state’s Medicaid program. Budget cuts compounded the problem of providing medical care for low-income residents. Hospitals, especially in rural areas, feared they would have to close. “The healthcare system only works when people have access to it,” says Stormont Vail CEO Randy Peterson. “It’s part of our social responsibility.”
While Brownback pitched his tax cuts as a job-creation strategy, Melissa Hildebrand, a fourth-generation dairy farmer who welcomed the tax cuts, offers one reason why lowering business taxes doesn’t necessarily lead to more employment. She tells Shopsin that on her farm, any increased cash flow from the tax cuts will likely go to the installation of more cost-efficient robotic milkers “which would actually eliminate some labor.”
As the Kansas legislature continues to work to stabilize state funding and improve the state’s credit rating, people like hospital CEO Randy Peterson say, “Quite frankly, I think the experiment failed.” What worries him now is that Congress has enacted similar tax cuts. “I’m a little concerned that we have the same concept at the national level now.”
At a Heritage Foundation panel last month, veteran tax cut advocate Grover Norquist acknowledged that the bad publicity generated by the “Kansas experiment” had been “unhelpful” to the tax reform movement. He recommended that supporters pay more attention to tax cutting efforts in North Carolina and Florida.
But the impact of the tax-slashing experiment in Kansas is still being felt by people in all walks of life across that conservative state, and as the video shows, they remain concerned, even if it’s expressed in a very polite, restrained Midwestern voice.
Caney Valley School District Superintendent Blake Vargas says he’s seen what can happen at the state and local level as a result of severe tax cuts, and he has a word of advice: “If it’s not worth it, if it’s not paying off, don’t be afraid to pull the plug.”