There are some debates that never die on Capitol Hill.
During the Senate Budget Committee confirmation hearing for Rep. Mick Mulvaney, R-S.C. (A, 94%) two weeks ago Senator Angus King. I-ME (F, 3%) asked President Trump’s Office of Budget and Management director nominee if tax cuts should be “revenue neutral.”
Mulvaney argued that reform to simplify the tax code was necessary, which would help the IRS increase collections. Specifically, on the issue of tax rates, Mulvaney said: “Given the political situation we face in this country, I think the best chance you have to reduce the deficit or balance the budget is to accomplish economic growth.”
Senator King replied:
Senator King, of course, is challenging the concept behind the Laffer Curve — the idea that you can lower taxes yet generate higher tax revenues. It was this concept that was behind President Ronald Reagan’s supply-side tax cuts — a policy that led to the vibrant economic growth in the 1980s after the Jimmy Carter stagflation years and, indeed, led to increased tax revenues.
And it was the Reagan model that current Kansas Governor Sam Brownback adopted in his state. Ian Fury, Brownback’s communications and policy strategist, took umbrage with Sen. King’s characterization of Kansas’ reforms.
In light of Rep. Mulvaney’s OMB hearing, Brownback’s office reached out to Conservative Review to correct the record on the Sunflower State.
In 2012, under Governor Brownback’s leadership, Kansas passed a tax relief program for individuals and small businesses. The state’s three-bracket income tax system was consolidated into two brackets. The two higher brackets with rates of 6.45 percent and 6.25 percent were cut to 4.9 percent. And the lower bracket rate was cut from 3. 5 percent to 3 percent. That tax relief was modified in 2013, and today the rates are 4.6 percent on the upper bracket and 2.7 on the lower bracket. Small businesses in the state also received a reduced rate.
Gov. Brownback defends this conservative “experiment” as a successful job-creating policy.
CR: When Sen. Angus King says this “experiment” going on in Kansas has not led to economic growth, what “experiment” is he referring to?
The Arizona State study the governor referenced states “the impact of the tax reforms has been positive” for the targeted economic sectors. The study shows that most of the private-sector job growth has been from “pass-through” businesses, and that private-sector employment grew in Kansas at a time when other comparable states saw a drop in their average growth rate.
On the other hand, left-leaning critics point to employment numbers that lag behind national numbers …
CR: Now, just to push back on you a little bit … people on the other side say that job growth has lagged behind the national average since your 2012 cuts. On the other hand, the Center for Budget Policy Priorities, which is a left-leaning organization, counter that those job statistics are not accurate.
CR: Now, in addition to what they claim is lagging job growth, opponents argue that tax revenues in Kansas have been falling — that this “scheme” of tax reform has dug a hole in the state budget. Can you speak to those falling revenues? What do you believe is the cause?
In the next part of this interview, Governor Sam Brownback discusses policies of the Trump administration.
Editor's note: This piece has been updated to clarify current tax rates in Kansas.
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