KANSAS GOV. Sam Brownback (R) proposed raising taxes over the weekend. You read that correctly.
That is the same Sam Brownback who, along with state GOP lawmakers, embarked on a bold conservative experiment in tax-cutting three years ago. The experiment failed, and Kansas is now in big, if predictable, trouble. Instead of spurring a treasury-filling economic boom, the deep tax breaks pushed the state’s budget far out of balance: Even after Republicans hacked away at education and highways and fiddled with payments for its pension program, the state still faces a $400 million gap.
With the legislature deadlocked and state workers facing mandatory furloughs if lawmakers don’t have a budget by Sunday, Mr. Brownback bowed to reality and proposed raising more tax revenue.
But he bowed only so far. He didn’t roll back his steep cuts to income and business taxes, instead proposing an increase in the sales tax from 6.15 percent to 6.65 percent.
In theory, moving away from taxes on labor and business and toward taxes on consumption can have attractive economic benefits. But the way Mr. Brownback originally cut business taxes provided “an incentive to game the tax system without doing anything productive for the economy,” the Tax Foundation’s Joseph Henchman found. Raising revenue by reversing this distortionary policy would seem to be the obvious first step toward fixing the budget.
Even if that weren’t the case, it is very hard to run a modern government on sales taxes without also imposing a heavy burden on low- and middle-income people. Apparently anticipating this issue, the governor also proposed exempting low-income Kansans from income taxes, offsetting the blow of a higher sales tax. But, the Wichita Eagle reports, the poor could still end up paying more. Besides, the new tax exemption wouldn’t help the state’s unemployed, who are also about to get walloped by a GOP crackdown on welfare benefits. The exemption also wouldn’t help those who make just enough not to qualify for it.
The state legislature, meanwhile, might not agree to Mr. Brownback’s plan. Though some lawmakers favor more sensible proposals than the governor’s, others want to look for yet more spending to cut. The Senate has been mulling across-the-board reductions in funding for state agencies, including education. This is astonishing. Kansas’s leaders have already frittered away state reserves, shortchanged investments in education and infrastructure and played around with its pension fund, all in service of a simplistic anti-tax orthodoxy. What they should be doing is raising revenue progressively to fund the state’s needs.
Mr. Brownback’s tax cuts were supposed to revitalize Kansas, giving the state a competitive advantage over its neighbors. Instead, the ongoing budget mess they caused is making the state’s leaders look worryingly incompetent.