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« Reply #1 on: July 07, 2017, 01:49:50 PM » |
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The Patriot Post Digest 7-6-2017
From The Federalist Patriot
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The promise was that the overhaul would attract businesses and encourage job growth. And in some ways, the reform delivered.
As Americans for Prosperity’s Kansas state director Jeff Glendening recently wrote22, “The year the tax cuts went into effect, Kansas received over 15,000 new small business filings — a state record. That record was broken again in 2013. … The target sector of the tax cuts — pass-through entities such as LLCs — have been responsible for 54,424 new jobs since 2013, or 98 percent of private sector job growth overall.”
Why, then, are some calling the cuts a failure? And, more importantly, why did the Republican-controlled legislature recently cave to this narrative and undo much of the tax overhaul by voting — and overriding Brownback’s veto — to hike taxes by $1.2 billion over the next two years?
It seems that despite new jobs, the state is facing an estimated $900 million budget shortfall. And many are laying the blame squarely on the tax cuts … because, of course, spending is never to blame.
But what’s really casting a shadow on the Sunflower State?
The answer is twofold.
First, as remedial economics teaches, cutting revenue works best when you also cut spending — particularly if the revenue drop is sudden and any projected revenue increases from future economic growth will (understandably) take time. It’s a pretty basic principle but apparently beyond the grasp of many politicians. While revenues dropped after the tax reform, spending grew.
According to the Kansas Policy Institute23, spending is expected to increase $181 million this year, $275 million next year, and $42 million the following. This continues an upward trajectory of growth that’s been rising fairly consistently (adjusted for inflation) since at least 1995.
Joel Griffith of the American Legislative Exchange Council and Kansas State Senator Ty Masterson note24, “General fund spending has increased by more than 4 percent adjusted for inflation since 2012. General fund spending 1995 through 2017 rose approximately 55 percent, adjusted for inflation and a whopping 89 percent in current dollars. If General fund spending growth had been held to the rate of inflation throughout this period, fiscal year 2017 spending would be $1.12 billion less. … For every 1 percent in population growth, spending increased by nearly 5 percent.”
Second, as the Tax Foundation’s Joe Henchman explains25, while tax reforms in other states have eliminated special carve-outs, Kansas’ overhaul added new carve-outs for select businesses. Testifying before the Kansas House Committee on Taxation, Henchman and Scott Drenkard cautioned26, “It’s important to note here that while decreasing taxes is generally associated with greater economic growth, the pass-through carve out is primarily incentivizing tax avoidance, not job creation.”
Indeed, while in 2012 it was estimated that 191,00 entities would capitalize on the carve-out, as of 2015 the number had risen to nearly 400,000, amounting to nearly $300 million per year in lost revenue without much benefit for the state’s economy.
Henchman and Drenkard conclude, “Tax reform is about broadening tax bases and lowering tax rates. This state has lowered tax rates in some spaces, but the pass-through exemption significantly narrows the tax base, and this has made for a less stable, productive, and competitive code.”
Those who drink the tax-and-spend Kool-Aid are falling over themselves to point to Kansas as “proof” that tax cuts don’t work. But the Left doesn’t exactly have a stellar track record of convincing anyone that high-tax states are economic utopias (think Illinois27, New Jersey, California and Connecticut). Soaring taxes haven’t solved28 these states’ budget woes29.
The truth is, tax cuts didn’t cause Kansas’ fiscal problems. Chronic spending hikes combined with poorly planned and executed tax reform led to the budget crunch. Instead of forcing taxpayers to bail out state government years or even decades into the future, Kansas lawmakers should double down on restraining spending and structuring a fair tax system that empowers all Kansans — not just the favored few — to create economic growth and right the ship on the state’s budget.
MORE ANALYSIS FROM THE PATRIOT POST
How the Universal Basic Income Stifles Human Flourishing30 — Billionaire Facebook CEO Mark Zuckerberg thinks UBI is a fantastic idea. Here’s why he’s wrong.
Using Kids to Mock Trump31 — Just when many Americans thought the Leftmedia couldn’t be more childish, the Washington Post proved them wrong — literally.
A Red State Forewarning on Taxes28 — Illinois budgeting is a cancer that doesn’t need to spread. But some Republicans are pushing tax increases.
BEST OF RIGHT OPINION
Gary Bauer: North Korean Nukes32
Cal Thomas: A Place Where Civility Once Ruled33
Victor Davis Hanson: Fracking Industry Deserves Our Gratitude34
For more, visit Right Opinion35.
OPINION IN BRIEF
Gary Bauer: “Under multiple U.S. presidents, it has been America’s policy that North Korea not be permitted to develop weapons systems that could threaten the continental United States. The main strategy employed by previous administrations to enforce this policy — economic sanctions — has failed. The result is that the North Koreans have accelerated their progress. President Trump has no good options, and big media cannot wait to blame him for whatever happens. The Washington Post website features a top story with this headline: ‘Trump Has Never Had A Plan For Dealing With North Korea.’ And what exactly was Barack Obama’s brilliant plan? He had eight years to deal with North Korea. Trump has been in office for five months. If a military solution is pursued, it is very likely that both North and South Korea will suffer high casualties. While many leftists insist that is unacceptable, the question remains: What will we do if Kim starts blackmailing his neighbors and us? By the way, the threat is far greater than just one rogue regime in Asia. There is tremendous military cooperation between North Korea and Iran. One weapons expert recently said, ‘In the past, we would see things in North Korea and they would show up in Iran. In some recent years, we’ve seen some small things appear in Iran first and then show up in North Korea.’ Unfortunately, whatever technological advances Pyongyang just achieved, Tehran just achieved them too.”
SHORT CUTS
Insight: “If the American Revolution had produced nothing but the Declaration of Independence, it would have been worthwhile.” —Samuel Eliot Morison (1887-1976)
Upright: “Friends such as Israel have gained energy independence by fracking. In contrast, some European allies who have banned fracking out of environmental worries are more vulnerable to Russian, Iranian and Middle Eastern pressure than ever before. Fracking is not easy. It requires legally protected property and mineral rights, a natural entrepreneurial spirit, environmental concern and a free-market. In other words, it is an American way of doing business.” —Victor Davis Hanson
Village Idiots: “Is the NRA a terrorist organization? I don’t know. But I don’t think the answer is a definitive ‘no,’ and that’s troubling enough.” —Hollywood fascist Michael Ian Black
Non sequitur: “The Right has been out of step with where America is for a long time. Trump doesn’t mind alienating as long as he has his core constituencies. His core constituency is somewhere between 29 and 39 percent. That is not enough to win an election.” —Howard Dean (And yet he sits in the White House.)
The road to poverty is paved with good intentions: “We should explore ideas like universal basic income to make sure that everyone has a cushion to try new ideas. Giving everyone the freedom to pursue purpose isn’t going to be free. People like me should pay for it.” —Mark Zuckerberg, who has accountants to help him avoid paying taxes for it
Braying Jackass: “How can we truly celebrate independence on a day that intentionally robbed our ancestors of theirs? To find my independence I went home.” —Colin Kaepernick
And last… “When I saw a video with a CNN logo poorly photoshopped into it, at no point did I think ‘I must know more about who did this.’” —Frank Fleming
Semper Vigilans Fortis Paratus et Fidelis
Managing Editor Nate Jackson
Join us in daily prayer for our Patriots in uniform — Soldiers, Sailors, Airmen, Marines and Coast Guardsmen — standing in harm’s way in defense of Liberty, and for their families. |
