Sunday, January 18, 2015

Brownback Proves Trickle-Down Won't Die

After a multiple year failure of income tax cuts to stimulate the Kansas economy or fund basic government, Governor Sam Brownback proves that Republican tax cut religion isn't just "voodoo" economics, but zombie economics.  These brain-eating ideas just won't die:
Kansas would nearly triple its cigarette tax, raise taxes on alcohol and slow down promised income tax cuts to balance its budget under proposals Republican Gov. Sam Brownback outlined Friday.
Brownback presented detailed recommendations to the GOP-dominated Legislature for eliminating projected shortfalls totaling more than $710 million in the current budget and for the fiscal year beginning July 1. He also presented a spending blueprint for the fiscal year beginning in July 2016 designed to leave the state with some cash reserves.
The state's budget problems arose after lawmakers aggressively cut personal income taxes in 2012 and 2013 at Brownback's urging to stimulate the economy. Brownback's budget-balancing plans would make those reductions more gradual, without abandoning his long-term goal of eliminating income taxes. The aggressive cuts had cemented Brownback's reputation in conservative circles and he has promoted them as something other states could emulate.
He proposed increasing the cigarette tax to $2.29 a pack from 79 cents and raising the tax on other tobacco products to 25 percent from 10 percent. The tax paid by consumers on beer, wine and liquor at liquor stores would jump to 12 percent from 8 percent. The increases would raise $394 million over two years, starting in July....
The governor's proposals also would divert funds for highway projects to general government programs and delay the elimination of a long-term funding gap in the pension system for teachers and government workers. Overall state aid for public schools would remain flat through June 2017 — with higher spending on teacher pensions.
Brownback is proposing more than $15 billion in total spending for the current fiscal year and each of the next two fiscal years. The state would end June 2017 with $253 million in cash reserves (ed. note: which it won't).....
Brownback promised during his State of the State address Thursday night that Kansas would keep moving to eliminate its income taxes, despite its budget problems.
He and top aides defended his proposals to raise cigarette and alcohol taxes, saying it's better to tax consumption rather than "productivity."
"You can't get out of a tax on productivity, but you can on consumption," Revenue Secretary Nick Jordan said in an interview. "You can decide how you're going to spend your money and what you're going to spend it on."
The state has cut its top personal income tax rate 29 percent and exempted the owners of 191,000 businesses altogether. Those changes would remain in place.
However, future cuts would be slower. For example, the state's lowest income tax rate, now 2.7 percent, was set to drop to 2.4 percent for 2016 and would dip to 2.66 percent instead.
What a goddamned idiot.  First off, the income tax cuts didn't increase economic activity, job creation and state revenues, so they failed on all counts.  Secondly, it is pretty clear that in a consumer economy, taxing consumption in place of "productivity" should put a dent into consumption, which is 2/3 of the economy.  Third, it is perfectly logical why regressive taxes are more damaging than progressive taxes in an economy with high income inequality.  Kansas has been the perfect model for the deficiencies of trickle-down economics, but the governor is too stupid to learn from what should be plain common sense.I also have trouble with this statement:
"You can't get out of a tax on productivity, but you can on consumption," Revenue Secretary Nick Jordan said in an interview. "You can decide how you're going to spend your money and what you're going to spend it on."
What in the fuck does that mean?  I thought Republicans believed the wealthy would just "go Galt" and quit working if income taxes were increased.  You can definitely get out of a tax on productivity (which is bullshit Frank Luntz terminology, since most lawyers and bankers, for example, do nothing productive), although almost nobody will.  But in the case of a sales tax (which was increased in the last Kansas budget), you actually have to work pretty hard to grow all your food and make all your clothing.  Sure, now the Governor just wants to jack up taxes on drinkers and smokers.  Well, I've got to say that having people like Sam Brownback running our country makes it pretty necessary to consume alcohol.  It's going to be hard for sensible Kansans to avoid that alcohol tax.  Well Kansans, you get what you vote for.  Have fun eating that seed corn, but don't watch out for brain-eating economists.  The zombie economics apocalypse is upon us.

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