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eridani

(51,907 posts)
Wed Jul 16, 2014, 04:56 AM Jul 2014

How Kansas and California Debunked the GOP's Tax Cuts Argument

http://readersupportednews.org/opinion2/277-75/24788-focus-how-kansas-and-california-debunked-the-gops-tax-cuts-argument

Governor Brownback and the GOP-led legislature also reduced sales taxes from 6.3 percent to 6.15 percent, where it would stay through 2018. This means sales taxes would be higher than income taxes, disproportionately hurting Kansas’ poor, who are already struggling to buy food and medicine and pay the rent. Brownback paid for the cuts by eliminating the home mortgage interest deduction, which is a tax break that middle-class homeowners depend upon.

Several years after those tax cuts were passed, Kansas’ economy is in the shitter. Kansas’ job growth has failed to keep up the pace with the national average. Moody's cut the state’s bond rating for the first time in over a decade, citing a lack of confidence in Kansas' fiscal leadership. Revenue projections are down $700 million from the year before, meaning public services like schools have to be cut as a result. In just fiscal year 2014 alone, the state fell short of estimated revenue projections by $338 million. Kansas’ non-partisan Legislative Research Department estimates Brownback’s tax cuts will cost the state $5 billion in lost revenue by 2019. To put that in perspective, Kansas currently has an $8 billion state budget.

Because public services are being cut, fewer people in the public sector are collecting a paycheck. And because more unemployed workers means less money spent in Kansas’ economy, things are expected to worsen under the current tax structure. As schools suffer from a lack of funds, Kansas’ public school students will fall behind and will be deprived of skills needed to be successful professionals in adulthood. Brownback’s future as a two-term governor is looking grim because of his failure to deliver on economic promises.

California did the exact opposite of Kansas. In 2012, when California was in a dire budget crisis, voters passed a critical ballot initiative undoing the state’s requirement of a two-thirds supermajority vote in the legislature to raise taxes. Through the initiative, California voters passed tax increases for everyone, including the rich, marginally increasing the sales tax while creating new income tax brackets of 10.3 percent for those who earned between $250,000 and $300,000; 11.3 percent for taxpayers who made anywhere between $300,000 and $500,000; 12.3 percent for incomes of $500,000 to $1,000,000; and 13.3 percent for all incomes above $1,000,000. The richest Californians would barely notice it, given the immense wealth in California’s major economic hubs like Silicon Valley, Hollywood, and the wine country.

After monitoring the results, the New Jersey Policy Perspective, a non-partisan think tank, found that California’s tax increases are paying off big time. The state’s coffers will gain approximately $6.8 billion in new revenue every year, all of which will be invested in public education. California saw 2.9 percent job growth in 2013, making it the third fastest-growing economy in the US. California will have an operational surplus of $9 billion by 2018, meaning even more public sector jobs created and a better economy for everyone. And because education is now a funding priority, California’s schoolchildren are set up to soar above and beyond national education averages. Well-educated kids means more people in the future able to take on high-skilled, good-paying jobs.

Putting these two states side by side, it doesn’t take an economics professor to see how much unnecessary tax cuts hurt a local economy, and how much marginal tax increases help an economy. At the federal level, American families have lost an average of roughly $48,000 in income per person, or $6.6 TRILLION, since the Bush tax cuts of 2001 (adjusted for inflation). As journalist David Cay Johnston pointed out, that’s enough money to pay off every family’s credit card debt, student loan debt, and car notes, while still having enough left in the bank.
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How Kansas and California Debunked the GOP's Tax Cuts Argument (Original Post) eridani Jul 2014 OP
The problem is that the rank and file GOP haven't noticed Warpy Jul 2014 #1

Warpy

(110,900 posts)
1. The problem is that the rank and file GOP haven't noticed
Wed Jul 16, 2014, 08:56 AM
Jul 2014

that tax cuts to hoarders don't work unless all you want to do is strip money away from everybody else and give it to a handful of hoarders. Dogmatists and ideologues have a peculiar blindness that prevents them from seeing that their Utopian dream has blown up in their piggy faces.

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