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ExpandMyMind

Kansas's ravaged economy a cautionary tale

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ExpandMyMind
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Individual state income tax rates dropped from 6.4% to 4.9% – with the intention of getting rid of them altogether eventually. Taxes were eliminated on so-called pass through entities – businesses where taxes are collected at the rate of the business owner and not at the corporate rate. The plan would provide a “shot of adrenaline” to the Kansas economy, Brownback claimed.

Instead, the state’s revenues collapsed. Rich people who had been paying high taxes became “pass-through entities”. The state’s coffers emptied and the promised economic miracle failed to materialize.

Lisa Ochs, president of the American Federation of Teachers-Kansas, said Brownback’s plan is a scale model of Trump’s plans. He, too, intends to cut taxes for businesses and give big breaks to the rich in a plan he says will provide “rocket fuel” for the American economy.

“There never was a shot of adrenaline. If anything, that shot put the state on life support,” she said. “It’s the same thing that Trump is saying: there’s going to be tremendous job growth. Well, that didn’t happen either. It’s going to take an entire generation to undo this damage.”

Ochs said: “I just hope the country can listen to us. Don’t do what we did.”

https://www.theguardian.com/us-news/2017/dec/10/donald-trump-kansas-failed-tax-cuts

I don't think people realise that tax cuts tend to lead to recessions and the largest tax cut in US history actually contributed immensely to The Great Depression:

I’m a Depression historian. The GOP tax bill is straight out of 1929.

Quote

 

That was more than three decades before the collapse of the economy in 1929. The crash followed a decade of Republican control of the federal government during which trickle-down policies, including massive tax cuts for the rich, produced the greatest concentration of income in the accounts of the richest 0.01 percent at any time between World War I and 2007 (when trickle-down economics, tax cuts for the hyper-rich, and deregulation again resulted in another economic collapse).

Yet the plain fact that the trickle-down approach has never worked leaves Republicans unfazed. The GOP has been singing from the Market-is-God hymnal for well over a century, telling us that deregulation, tax cuts for the rich, and the concentration of ever more wealth in the bloated accounts of the richest people will result in prosperity for the rest of us. The party is now trying to pass a scam that throws a few crumbs to the middle class (temporarily — millions of middle-class Americans will soon see a tax hike if the bill is enacted) while heaping benefits on the super-rich, multiplying the national debt and endangering the American economy.

As a historian of the Great Depression, I can say: I’ve seen this show before.

In 1926, Calvin Coolidge’s treasury secretary, Andrew Mellon, one of the world’s richest men, pushed through a massive tax cut that would substantially contribute to the causes of the Great Depression. Republican Sen. George Norris of Nebraska said that Mellon himself would reap from the tax bill “a larger personal reduction [in taxes] than the aggregate of practically all the taxpayers in the state of Nebraska.” The same is true now of Donald Trump, the Koch Brothers, Sheldon Adelson and other fabulously rich people.

During the 1920s, Republicans almost literally worshiped business. “The business of America,” Coolidge proclaimed, “is business.” Coolidge also remarked that, “The man who builds a factory builds a temple,” and “the man who works there worships there.” That faith in the Market as God has been the Republican religion ever since. A few months after he became president in 1981, Ronald Reagan praised Coolidge for cutting “taxes four times” and said “we had probably the greatest growth in prosperity that we’ve ever known.” Reagan said nothing about what happened to “Coolidge Prosperity” a few months after he left office.

 

https://www.washingtonpost.com/news/posteverything/wp/2017/11/30/im-a-depression-historian-the-gop-tax-bill-is-straight-out-of-1929/?utm_term=.40c564d2baf4

It's crazy to me, that this con (for it is a con) can be so widely supported by conservatives, most of whom have been hit amongst the hardest by tax cuts for the rich, all throughout history. It really does speak wonders for the PR machines of politicians.

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third_eye

Don't worry ... there was no TV back then ...

~

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Gromdor

  Ah, Brownback and the tax experiment.  I remember it.  There was a lot of talk at first, but then everyone conveniently forgot about it when it went south.  Trickle down at it's finest.  I would imagine that the same thing that happened to Kansas will happen nationally.  We try it, it fails, and then we raise taxes back up. 

I guess my view is, people will never accept that their ideology is wrong unless they suffer from it first hand.  If we do anything to prevent this learning curve then the lesson will never be learned.  The obstruction will be used as the excuse for the failure. 

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Tatetopa

 

8 minutes ago, Gromdor said:

I guess my view is, people will never accept that their ideology is wrong unless they suffer from it first hand.  If we do anything to prevent this learning curve then the lesson will never be learned.  The obstruction will be used as the excuse for the failure. 

Yes, I think this needs to happen.  There is such a strong sentiment whipped up about this that in the interest of long term survival as a nation, the experiment needs to happen.

I have spent a lot of my engineering career doing designed experiments in a casting foundry.  That technique actually started in agricultural colleges measuring effects of various soil elements on wheat and corn yields; pretty basic earthy science.    Causes are most reliably tied to effects when one factor is varied.

We in the US are about to start a multiple factor designed experiment.

We are going to change taxes, immigration, and regulations.  probably health care will change as well.  There will be first order terms, effects of the main variables; and second and third order terms; effects of interactions between main variables.  From experience, these types of experiments are difficult to resolve.  Common sense doesn't tell you, it takes statistics to winnow out the effects unless they are major.

My cynical side suggests that if  results come out contrary to desires, most people will not waste time looking at statistics, and links of cause and effect.  They will assume because it is easiest and most comforting that the other side did something to screw up the test.

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ExpandMyMind

I feel it's relevant to compare this to Clinton's tax plan:

This recent bill was not even seen by a Democrat (or most Republicans) until hours before the vote, and, from that time up until the actual vote they were scribbling alterations in the margins as they went. It was also only created over the course of a few weeks.

Clinton's plan was created over the course of months with input from both parties and lots of debate (the way legislation has always been introduced). It was an open process that took months to develop and was debated for almost as long.

For the record, I'm not supporting Clinton's plan, I am merely showing how completely underhanded and undemocratic this Republican process was. There bill likely contains loads of mistakes and errors. And in fact, we know that they made a massive one regarding their own interests.

Senate Republicans Made a $289 Billion Mistake in the Handwritten Tax Bill They Passed at 2 a.m. Go Figure.

Quote

Except not under the Senate bill. When Mitch McConnell & co. revived the AMT, they absentmindedly left it at its current rate of 20 percent, the same as the new, lower rate of the corporate income tax that the bill included. As a result, many companies won’t be able to use tax breaks that were supposed to be preserved in the legislation, including the extremely popular credit for research and development costs. Corporate accountants started freaking out about this over the weekend, but the situation reached high farce when a group of lawyers from Davis Polk pointed out that, by leaving the AMT intact, Republicans had essentially undermined their bill’s most important changes to the international tax code.

https://slate.com/business/2017/12/senate-republicans-may-have-made-a-usd260-billion-mistake-in-their-tax-bill.html

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third_eye

Don't worry, Trumpotus will just fire those responsible ...

Everything will be fine ...

~

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acidhead

I like Trump's tax policy.  Offering to lowering the corporate tax rate from 35% to 20% is a Yuge tax break for all businesses big or small.  I incorporated my small business years ago here in BC Canda... At 17%.. best decision I've ever made. I surely hope his plan doesn't get derailed.  He knows what he's doing when it comes to business and I hope to God people see through those who are trying to discredit his vision to help all Americans economically.

 

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ExpandMyMind
3 minutes ago, acidhead said:

I like Trump's tax policy

You've not even seen it. No one can even read the handwriting in the margins, so it's still being deciphered :lol:

The corporate rate was already at 20% due to loopholes. This was an attempt to lower it further, with more loopholes. It backfired. See post 5.

Low corporate taxes are not good for an economy. Source: economists. Low taxes in general are not good for a country. How incredible it is that this myth has been so comprehensively sold to conservatives. 

Also, it's not Trump's policy. It's Ryan's.

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acidhead
3 minutes ago, ExpandMyMind said:

You've not even seen it. No one can even read the handwriting in the margins, so it's still being deciphered :lol:

The corporate rate was already at 20% due to loopholes. This was an attempt to lower it further, with more loopholes. It backfired. See post 5.

Low corporate taxes are not good for an economy. Source: economists. Low taxes in general are not good for a country. How incredible it is that this myth has been so comprehensively sold to conservatives. 

Also, it's not Trump's policy. It's Ryan's.

You are just talking through your ass expandmymind.  I own my own business.  Was a sole proprietorship for years and switched to incorporating my business. Ive personally experienced the difference and it's grown my business.  What have you done except attack the free market by posting communist articles.  Do you even have a job? 

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ExpandMyMind
27 minutes ago, acidhead said:

You are just talking through your ass expandmymind.  I own my own business.  Was a sole proprietorship for years and switched to incorporating my business. Ive personally experienced the difference and it's grown my business.  What have you done except attack the free market by posting communist articles.  Do you even have a job? 

Yeah, you're business. That helps you. Taxes are designed to help an entire society.

Communism? What?

I live in your basement. Free wifi.

Edited by ExpandMyMind
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acidhead
On 11/12/2017 at 4:56 AM, ExpandMyMind said:

Yeah, you're business. That helps you

Communism? What?

I live in your basement. Free wifi.

*snip*

Edited by Saru
Removed personal insult
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ExpandMyMind
On 11/12/2017 at 5:00 AM, acidhead said:

*snip*

No need for that talk. Why make it personal?

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acidhead
5 minutes ago, ExpandMyMind said:

No need for that talk. Why make it personal?

Because I'm sick of the victim mentallity.. you have all the possibilities out there available for you.. yet it's the same old story of other people have it better and are pushing me down.. you are a young man still... Use that energy to do something you like to do and become the best at it.  

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acidhead

I think you could do great things expandmymind... I do.. known u a long time... Just go do it.  You are an intelligent individual.

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ExpandMyMind
18 minutes ago, acidhead said:

Because I'm sick of the victim mentallity.. you have all the possibilities out there available for you.. yet it's the same old story of other people have it better and are pushing me down.. you are a young man still... Use that energy to do something you like to do and become the best at it.  

I have no feelings of resentment like you describe. 

How does wanting elites and corporations to pay their fair share equate to having a victim mentality? When normal, working class folks pay their way, why shouldn't rich people? That 25% means a lot more to a working class family than 40% does to a filthy rich person with a family. It can often mean the difference between a working class family eating and not, clothing their family or not, or heating their house or not. It has practically no effect on someone rich enough to be in that tax bracket - while paying it contributes immensely to the society in which they live.

Edited by ExpandMyMind
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preacherman76

Man its like no one even notices or cares that our jobs have left this country by the millions, half the reason being we make corporations pay the highest taxes in the world. How did it help all these people when their jobs left the game?

Why go all the way back to the great depression? Why no mention of Regan's tax cuts? I think I can guess why.

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preacherman76

And I love how this article says Trumps tax plan has already failed, literally said what was expected to happen, didn't, before it's even been tried.

 

I mean really, at what point does msm become a joke to you people? Wait wait, I know, the fact that they have been forced to retract more stories in a single week then they have in the last decade makes them MORE credible right? Just stop. Please. You are making fools of yourself.

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RoofGardener
9 hours ago, ExpandMyMind said:

You've not even seen it. No one can even read the handwriting in the margins, so it's still being deciphered :lol:The corporate rate was already at 20% due to loopholes.....

so the Tax plan would have acknowledged that fact, and make the corporate tax system more transparent and less bureaucratic ? (and eliminate layers of parasitic tax lawyers and accountants). Wow, what an EVIL man that President Trump is :P

Quote

....

Low corporate taxes are not good for an economy. Source: economists. Low taxes in general are not good for a country. How incredible it is that this myth has been so comprehensively sold to conservatives. 

TRULY ? I find that hard to believe. Low taxes per se are good for a country, as it means that the "act of governance" constitutes a lower burden upon peoples resources.  Of course, deliberately starving a country (or state) of investment by cutting taxes TOO much CAN cause problems. But that is not the fault of "low taxes", that is a problem with "inappropriately low" taxes.

So what about Kansas ? Well, it had one bad year (2014) that was  due to federal tax changes, and has subsequently rallied. The tax plan may not have worked exactly as hoped, but nontheless Kansas has had both better private income growth, better tax revenue growth, and better commercial growth, than any of its neighbouring states.

http://www.foxnews.com/opinion/2017/10/29/dont-let-way-kansas-handled-tax-cuts-be-used-as-excuse-to-block-federal-cuts.html

 

 

Edited by RoofGardener
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Dark_Grey
19 hours ago, ExpandMyMind said:

I feel it's relevant to compare this to Clinton's tax plan:

This recent bill was not even seen by a Democrat (or most Republicans) until hours before the vote, and, from that time up until the actual vote they were scribbling alterations in the margins as they went. It was also only created over the course of a few weeks.

Clinton's plan was created over the course of months with input from both parties and lots of debate (the way legislation has always been introduced). It was an open process that took months to develop and was debated for almost as long.

For the record, I'm not supporting Clinton's plan, I am merely showing how completely underhanded and undemocratic this Republican process was. There bill likely contains loads of mistakes and errors. And in fact, we know that they made a massive one regarding their own interests.

Senate Republicans Made a $289 Billion Mistake in the Handwritten Tax Bill They Passed at 2 a.m. Go Figure.

https://slate.com/business/2017/12/senate-republicans-may-have-made-a-usd260-billion-mistake-in-their-tax-bill.html

The Clinton tax plan is to create a "charity" to launder all the cash, both foreign and domestic. I have no doubt the scenario you described happens all the time in Washington. Politics are a mess and everyone is out to get theirs. Do we need to go through the list of nasty policies Democrats have hastily scribbled in to outgoing bills? It's almost 2018 - I don't think anyone is viewing the two parties through rose colored glasses, unless you're really on the fringe.

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Gromdor

Honestly, I can't judge the tax plan right now because it is literally a hand-written mess.  I may or may not be able to deduct my state taxes, property taxes, mortgage, etc.  I may or may not have my standard deduction doubled and I may or may not have a personal income credit.  I may or may not be able to deduct medical expenses.  I may or may not pay lower/higher taxes.  I may or may not have to be a part of another 2 trillion added to national debt. 

When they actually get a finalized form on paper, I will hold true judgement.

 

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ExpandMyMind
2 hours ago, RoofGardener said:

so the Tax plan would have acknowledged that fact, and make the corporate tax system more transparent and less bureaucratic ? (and eliminate layers of parasitic tax lawyers and accountants). Wow, what an EVIL man that President Trump is :P

Quote

This wasn't Trump's bill. I wrote this in the same reply you have quoted.

And it was an attempt to lower the corporate tax to lower than 20%.

2 hours ago, RoofGardener said:

TRULY ? I find that hard to believe. Low taxes per se are good for a country, as it means that the "act of governance" constitutes a lower burden upon peoples resources.  Of course, deliberately starving a country (or state) of investment by cutting taxes TOO much CAN cause problems. But that is not the fault of "low taxes", that is a problem with "inappropriately low" taxes.

Almost every major tax cut has led to recessions.

Low taxes take money away from all sorts of social programs, usually by design, in order to pay for them. 

But there are those who argue both sides of whether or not it is beneficial for the 'economy', I will admit that. That depends, though, on whether your talking about beneficial for giant corporations or actual, normal, everyday people. Trickle down economics has been shown countless times to be a myth.

2 hours ago, RoofGardener said:

So what about Kansas ? Well, it had one bad year (2014) that was  due to federal tax changes, and has subsequently rallied. The tax plan may not have worked exactly as hoped, but nontheless Kansas has had both better private income growth, better tax revenue growth, and better commercial growth, than any of its neighbouring states.

Come on, I'm willing to consider your opinion, but please find a better source than the official megaphone for the GOP. You'd be as well quoting Murdoch himself.

Quote

In the Congressional Budget Office's analysis of the Senate tax bill, the cuts wouldadd $1.414 trillion to the deficit by 2027

https://www.nytimes.com/interactive/2017/11/28/us/politics/tax-bill-deficits.html

Tell me how that is beneficial to the economy.

1 hour ago, Dark_Grey said:

The Clinton tax plan is to create a "charity" to launder all the cash, both foreign and domestic. I have no doubt the scenario you described happens all the time in Washington. Politics are a mess and everyone is out to get theirs. Do we need to go through the list of nasty policies Democrats have hastily scribbled in to outgoing bills? It's almost 2018 - I don't think anyone is viewing the two parties through rose colored glasses, unless you're really on the fringe.

I'm not in support of his plan. In fact, I don't think there's anything about him or his Presidency I would support.

My point was that the method used to pass this bill was a disgrace and entirely undemocratic (and as far as I know, unprecedented), and I'm not sure anyone on either side of the aisle could honestly disagree. If this had been how a Democrat Congress had passed a bill, is there anyone on the right who would argue that it was above board? Bloody murder would be screamed from the rooftops, in all likelihood.

Edited by ExpandMyMind
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Gromdor
11 hours ago, RoofGardener said:

So what about Kansas ? Well, it had one bad year (2014) that was  due to federal tax changes, and has subsequently rallied. The tax plan may not have worked exactly as hoped, but nontheless Kansas has had both better private income growth, better tax revenue growth, and better commercial growth, than any of its neighbouring states.

http://www.foxnews.com/opinion/2017/10/29/dont-let-way-kansas-handled-tax-cuts-be-used-as-excuse-to-block-federal-cuts.html

 

 

https://www.brookings.edu/blog/unpacked/2017/07/11/the-kansas-tax-cut-experiment/

The economy did not grow as fast as it's neighboring states.  The results were so bad that the Republicans ended up raising the taxes back up, overriding Brownback's veto.  Iowa borders two of the neighboring states, so I actually paid attention. 

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ExpandMyMind
33 minutes ago, Gromdor said:

https://www.brookings.edu/blog/unpacked/2017/07/11/the-kansas-tax-cut-experiment/

The economy did not grow as fast as it's neighboring states.  The results were so bad that the Republicans ended up raising the taxes back up, overriding Brownback's veto.  Iowa borders two of the neighboring states, so I actually paid attention. 

Thanks for highlighting the reason you should never trust Fox News.

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DieChecker
On 12/11/2017 at 4:59 PM, Gromdor said:

https://www.brookings.edu/blog/unpacked/2017/07/11/the-kansas-tax-cut-experiment/

The economy did not grow as fast as it's neighboring states.  The results were so bad that the Republicans ended up raising the taxes back up, overriding Brownback's veto.  Iowa borders two of the neighboring states, so I actually paid attention. 

Seems to me this is the take away...

Quote

In reality, many people in Kansas re-characterized income from labor into business-form in order to take advantage of the 0 percent tax rate.

If this had not happened, would the cuts have worked? Probably impossible to say. 

Is there a comparative tax cut in this new legislation? Are we to believe cutting the corporate rate will send everyone in the top 1% into placing all their wealth into a corporation? And thus ruining the economy? Could happen, I guess. But, that basically is a Doomsday prophesy at this point.

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