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Supply side economics is working in Kansas!

theeedude

theeedude

Lifer
Just kidding, it's an unmitigated disaster 😀
http://www.vox.com/2014/7/8/5868717/sam-brownback-kansas-tax-cut

After the cuts became law, it was undisputed that Kansas's revenue collections would fall. But some supply-side analysts, like economist Arthur Laffer, argued that increased economic growth would deliver more revenue that would help cushion this impact.

Yet it's now clear that the revenue shortfalls are much worse than expected. "State general fund revenue is down over $700 million from last year," Duane Goossen, a former state budget director, told me. "That's a bigger drop than the state had in the whole three years of the recession," he said — and it's a huge chunk of the state's $6 billion budget.
...
Kansas has to balance its budget every year, so when that surplus runs out, further spending cuts will be necessary. The declining revenues have necessitated extensive cuts in state education funding, according to the Center on Budget and Policy Priorities. Moody's cut of the state's bond rating this May was another embarrassment. And the economic benefits Brownback promised haven't materialized either. Chris Ingraham wrote at Wonkblog that Kansas's job growth has lagged behind the rest of the country, "especially in the years following the first round of Brownback tax cuts."
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As expected from trickle down, the state is in the red and has been downgraded, new jobs and growth failed to materialize. Now Brownback is trying to blame Obama for the mess he himself created for his state.
 
senseamp said:
As expected from trickle down, the state is in the red and has been downgraded, new jobs and growth failed to materialize.

Now Brownback is trying to blame Obama for the mess he himself created for his state.
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Where did they expect "new jobs and growth"to come from???
 
Zebo said:
I blame the freeze and drought a couple years back killing all the pheasant for a generation. That's all I ever went to Kansas for. What else is there?

http://www.kansas.com/2013/09/29/3028475/pheasant-quail-hunting-will-be.html
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The population up here has probably doubled, can't drive 10 miles out of town without spotting one



AyashiKaibutsu said:
All the peasants in Kansas are dead?! O.O Who's living there now?
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Lot's of them immigrated up here too, doing quite well now
 
This could be interesting. The new tax rates have been in effect for 18 months. In that time Kansas is 2nd in job growth in its region, behind Oklahoma. They also cut out a lot of government jobs, so there are lots of adjustments. I hope they stick it out for at least another year, so we see if the trend continues where we get job growth but not an increase in the tax revenue.

Historically, a drop in taxes has lead to some tax revenue increases, but not always. This is a great thing to study.
 
realibrad said:
This could be interesting. The new tax rates have been in effect for 18 months. In that time Kansas is 2nd in job growth in its region, behind Oklahoma. They also cut out a lot of government jobs, so there are lots of adjustments. I hope they stick it out for at least another year, so we see if the trend continues where we get job growth but not an increase in the tax revenue.

Historically, a drop in taxes has lead to some tax revenue increases, but not always. This is a great thing to study.
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This is not accurate. Tax decreases lead to lower tax revenues. The CBO has studied this pretty extensively.
 
eskimospy said:
This is not accurate. Tax decreases lead to lower tax revenues. The CBO has studied this pretty extensively.
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Ill show you mine if you show me yours.

Federal-Revenue-Tax-Brackets5-1024x434.png


I think for accuracy this is about reducing rates on the upper income brackets. The belief is that in doing so, it becomes cheaper to pay the tax, vs paying someone to help you reduce your tax burden through loopholes and tax breaks.

But, in history it has been true that when the top taxes are reduced, revenue went up. It could just be correlation and not causation.
 
realibrad said:
Ill show you mine if you show me yours.

Federal-Revenue-Tax-Brackets5-1024x434.png


I think for accuracy this is about reducing rates on the upper income brackets. The belief is that in doing so, it becomes cheaper to pay the tax, vs paying someone to help you reduce your tax burden through loopholes and tax breaks.

But, in history it has been true that when the top taxes are reduced, revenue went up. It could just be correlation and not causation.
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http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/69xx/doc6908/12-01-10percenttaxcut.pdf

CBO estimated effects on output ranging from increases of 0.5 percent to 0.8 percent over the first five years on average, and from a decrease of 0.1 percent to an increase of 1.1 percent over the second five years. The budgetary impact of the economic changes was estimated to offset between 1 percent and 22 percent of the revenue loss from the tax cut over the first five years and add as much as 5 percent to that loss or offset as much as 32 percent of it over the second five years.
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Bolding is mine. In short, tax cuts cause lower revenues. Depending on your economic assumptions about the effects of tax breaks, that revenue loss is something less than 100% of their impact.

EDIT: Also yes, it is very important to note that your chart only lists the top bracket. That is leaving a huge amount of federal revenues unexplained.
 
realibrad said:
Ill show you mine if you show me yours.

Federal-Revenue-Tax-Brackets5-1024x434.png


I think for accuracy this is about reducing rates on the upper income brackets. The belief is that in doing so, it becomes cheaper to pay the tax, vs paying someone to help you reduce your tax burden through loopholes and tax breaks.

But, in history it has been true that when the top taxes are reduced, revenue went up. It could just be correlation and not causation.
Click to expand...

That chart is meaningless because it compares apples to oranges. It compares top tax rate which by itself is useless to the dollar tax revenues without accounting for the GDP growth or inflation.

If you want to prove your point, you need to find a graph that compares tax revenues as a percentage of GDP to the median tax burden as a percentage of income. That is the only metric that's useful for determining tax revenues vs tax rate.
 
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realibrad said:
This could be interesting. The new tax rates have been in effect for 18 months. In that time Kansas is 2nd in job growth in its region, behind Oklahoma. They also cut out a lot of government jobs, so there are lots of adjustments. I hope they stick it out for at least another year, so we see if the trend continues where we get job growth but not an increase in the tax revenue.

Historically, a drop in taxes has lead to some tax revenue increases, but not always. This is a great thing to study.
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From the article, it seems like the cuts aren't going anywhere soon since the (D) running for office wants to keep them.

Yet while Davis opposed Brownback's tax cuts, and has been harshly critical of their effects, he hasn't called for them to be repealed. Instead, he's said that a new round of cuts should be postponed — and called for a commission to explore reducing local property taxes. So it seems that, regardless of who wins this fall, Kansas will be experiencing the effects of Brownback's experiment for quite some time.
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If I am reading the summary correctly, they made 2 assumptions, and then compared them to each other. The first is that households would adjust to the new tax brackets and shows a slight net positive. The 2nd says that people will work more, and save more in the assumption that the rates will go back up. That shows the net negative.

Those assumptions are pretty big and looking at the history of the US, I dont see savings going up over the long term, if the rates were to stay flat. If people do think they will go up, then I think the reduction in tax rates becomes almost pointless.
 
fleshconsumed said:
That chart is meaningless because it compares apples to oranges. It compares top tax rate which by itself is useless to the dollar tax revenues without accounting for the GDP growth or inflation.

If you want to prove your point, you need to find a graph that compares tax revenues as a percentage of GDP to the median tax burden as a percentage of income. That is the only metric that's useful for determining tax revenues vs tax rate.
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Good point on inflation. Whoever made that chart was being terribly misleading.
 
realibrad said:
Ill dig into it, but I think both of you are making the assumption that its not adjusted for inflation.
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Even if it is the chart is still bad for the other reasons mentioned. The CBO analysis is far more robust and its conclusion is that tax cuts don't come anywhere remotely close to even paying for themselves, much less increasing overall revenues.
 
realibrad said:
Ill dig into it, but I think both of you are making the assumption that its not adjusted for inflation.
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Even if it is adjusted for inflation I highly doubt it is adjusted for GDP growth - as GDP grows, so do tax receipts if you measure them in dollars as opposed to percentage based.

As I said. The only valid measure that would prove or disprove your point is comparing a) tax receipts as a percentage of GDP and b) median tax burden.
 
fleshconsumed said:
Even if it is adjusted for inflation I highly doubt it is adjusted for GDP growth - as GDP grows, so do tax receipts if you measure them in dollars as opposed to percentage based.

As I said. The only valid measure that would prove or disprove your point is comparing a) tax receipts as a percentage of GDP and b) median tax burden.
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I just found this site. Don't know the quality, but its pretty neat.

http://www.usgovernmentrevenue.com/...Sp_15s1lo111mcn_F0t_Revenue_As_Percent_Of_GDP

You can adjust the starting year. When I did 1970 -> it shows a small trend up for the most part.

usgs_line.php
 
realibrad said:
I just found this site. Don't know the quality, but its pretty neat.

http://www.usgovernmentrevenue.com/...Sp_15s1lo111mcn_F0t_Revenue_As_Percent_Of_GDP

You can adjust the starting year. When I did 1970 -> it shows a small trend up for the most part.

usgs_line.php
Click to expand...

Further evidence that tax cuts do not increase revenues:
http://www.nber.org/digest/jul12/w17860.html

I have to say that the literature on this issue is pretty overwhelming on the side of tax cuts not paying for themselves or even coming close.
 
Yep Kansas is trying to find a way to suck as much as Oklahoma. Our kids don't need no learning.

Remember this "miracle" was achieved by a governor who won in a landslide election and then proceeded to primary every republican who wasn't from the batshit crazy wing of the party to get super-majorities in both houses to ram through his program. Several Koch funded groups were key parts of that effort as well.
 
realibrad said:
Ill show you mine if you show me yours.

Federal-Revenue-Tax-Brackets5-1024x434.png
Click to expand...

Keep in mind that you have a massive credit/debt bubble in motion on this chart. And with all that credit comes inflated revenues which can and will affect your reasoning potentially leading to a catastrophically incorrect conclusion. This is a complex topic with very complex data sets, almost impossible to analyze under a fiat money system undergoing collapse.
 
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