GOP presidential candidates’ tax plans mirror KS Gov Brownback’s debacle

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by Félix Pérez/image courtesy of Gage Skidmore

The idea behind trickle-down economics championed by Kansas Gov. Sam Brownback is seductively simple: reduce spending on government services while simultaneously providing corporations and the highest income earners tax cuts, and they will grow the economy by hiring more workers, providing raises to employees and spending more.

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But in Kansas, where Brownback and like-minded state lawmakers have had free rein to impose their economic policies, the reality has come nowhere close to proving the theory.

Kansas’s economy is in a tailspin. The revenues used to pay for schools, Head Start, colleges and universities, roads, job training, health services, libraries and other vital public services were revised downward this month by a “stunning” $159 million. The results of Brownback’s “real live experiment” include school districts shutting down early, larger class sizes, a teacher shortage, and decreased pension payments. All the while, the state careens from one budget crisis to the next with no end in sight.

GOP tax plansThe Center on Budget and Policy Priorities described Brownback’s economic formula this way: “Kansas’ huge tax cuts have left that state’s schools and other public services stuck in the recession, and declining further — a serious threat to the state’s long-term economic vitality. Meanwhile, promises of immediate economic improvement have utterly failed to materialize.”

Apparently, though, the Brownback failed experiment isn’t enough to scare off leading Republican presidential candidates. According to an analysis by the nonpartisan Tax Foundation, Sen. Ted Cruz’s tax-cut proposal would increase the federal deficit and reduce federal revenue by $768 billion, Sen. Marco Rubio’s by $2.4 trillion, and real estate mogul Donald Trump’s by a staggering $10.1 trillion.  The GOP supply-side economics exacerbate the troubling and growing trend of historic income inequality that is leaving working families and the poor further behind.

Trump’s proposal would generate the greatest benefits for the top 1 percent of income earners, who would see their after-tax income rise by 21.6 percent. Conversely, income earners in the three lowest income brackets would have after-tax income gains of between 0.6 percent to 1.4 percent. The top 1 percent fare well in Cruz’s and Rubio’s plans as well, registering after-tax income gains of 29.6 percent and 11.5 percent, respectively.

The Center for Tax Justice calculated Rubio’s plan, for example, would give the top 1 percent a tax cut of $220,000 a year. CTJ concluded that half of Bush’s tax cuts would go to the wealthiest 1 percent of Americans, for an average of nearly $180,000. Trump’s tax cuts would provide the top 1 percent more than $227,000 in after-tax gains.

Utah elementary school teacher and National Education Association President Lily Eskelsen García, after watching the GOP debates, said:

The debates offered another three hours of Republican presidential candidates offering the same old failed economic ideas that do nothing more than help the 1 percent get ahead while working families struggle to make ends meet. It’s truly shameful that these candidates have spent nearly every minute of their debates bickering while completely ignoring the needs of America’s children and public education in this country.

USA Today, the nation’s largest circulation newspaper, did not have too charitable a view of the Republican candidates’ plans. The newspaper’s editorial board wrote, “If Republicans are the party of fiscal responsibility, as opposed to those big-spending Democrats, you wouldn’t know it from the GOP candidates’ reckless tax-cut proposals.” It went on to state, “One of the scariest moments in Tuesday’s GOP presidential debate came when Ted Cruz suggested his proposal was more responsible because it would cost only about three-quarters of a trillion dollars over 10 years.

“Even worse, these numbers depend on the economic growth the candidates claim their plans will create. Studies and real-world experiments show that big tax cuts don’t reliably spur growth, but they surely wreck budgets.”

 

Reader Comments

  1. There is a sweet spot in taxation. If you tax too much you stunt economic growth. Businesses leave and those businesses pay no taxes. People don’t spend as much and there are no jobs and therefore more welfare costs. This is the case in many countries in Europe.

    If you tax too little, however, important services go unmet and you have more problems. Obviously Kansas taxed too little and now is paying the piper.

    I know that Arizona has spent very little on schools. As a result, good teachers don’t stay and academic achievement suffers.

    I don’t know where the sweet spot is, but Kansas also missed it by a mile. I can’t see how allowing hedge fund managers to be taxed at the long term capital gains rate or qualified dividend rate helps the economy in any way.

    We need leaders in Washington and the state houses who are capable of finding and willing to explore that if we are to have both economic growth and good services for the citizens.

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