Democrats in the U.S. Senate on Wednesday used a group of like-minded witnesses to attack President Donald Trump’s tax cut plan by comparing it to what they repeatedly referred to as Kansas’ “failed” tax experiment.
Two Kansans — House Democratic Leader Jim Ward and state employee union representative Sarah LaFrenz — joined a list of national experts in assailing the 2012 Kansas tax cut experiment that Republican Gov. Sam Brownback touted as a “red state model.”
“The great experiment was a complete and utter failure that nearly bankrupted our state,” Ward said to kick off an unofficial hearing staged by the Democratic Policy and Communications Committee.
Brownback predicted his cuts in individual income and business taxes would generate enough new economic activity to prevent any substantial reduction in revenues. He was wrong: The robust growth he forecast never materialized. Instead, revenues crashed and Brownback and lawmakers spent the next several years struggling to balance the state budget with a combination of sales tax increases, accounting tricks and spending cuts.
LaFrenz, a Kansas Department of Health and Environment employee who is active in the union that represents state workers, said the budget problems forced deep cuts in state government and the services it provides.
“At last count the state of Kansas employee workforce has been reduced by 25 percent,” she said, arguing the reductions have contributed to staffing shortages that have made the state’s prisons and highways less safe and compromised the ability of agencies to manage child welfare programs and enforce environmental regulations.
During the 2017 legislative session, Brownback, who is awaiting U.S. Senate confirmation as ambassador-at-large for international religious freedom, fought efforts to roll back his tax cuts, arguing that a slump in agriculture and energy production was to blame for the drop in state revenues.
But a coalition of Democrats and moderate Republicans elected to the Legislature on a promise to “fix the mess in Topeka” overcame his opposition and that of conservatives arguing for spending cuts to pass a $1.2 billion tax increase.
Trump and GOP congressional leaders appear to be ignoring that history in claiming the tax cuts they are proposing will essentially pay for themselves by stimulating growth and producing jobs.
“That’s a lie,” said Bruce Bartlett, a former economic adviser to President Ronald Reagan. “There’s not one iota of evidence that will support this argument. They just assert it.”
One of the most controversial elements of Trump’s plan is a proposal to lower the tax rate on so-called pass-through income. Under Brownback’s plan, nearly 400,000 business owners and farmers claimed pass-through exemptions in 2015.
Trump’s proposal to lower the tax on such income to 25 percent from 39.6 percent would prompt a similar wave of tax avoidance, said Gene Sperling, a former director of the National Economic Council and an adviser to Presidents Bill Clinton and Barack Obama.
“That will be the greatest incentive to tax evasion that we’ve ever had,” Sperling said at the hearing. “I think it’s going to be quite a mess … for quite some time.”
Summing up the testimony at the end of the hearing, Massachusetts Sen. Elizabeth Warren said, “We’ve now seen the movie and know how it ends.”
Jim McLean is managing director of KMUW's Kansas News Service, a collaboration of KMUW, Kansas Public Radio and KCUR covering health, education and politics in Kansas. Follow him on Twitter @jmcleanks.