In 2012, Kansas underwent the most massive string of tax cuts ever enacted by any state – a model that had many in other states turning green with envy. In reality, however, such tremendous cuts have proven a detriment to the state’s economy, with schools and other public services still struggling to recover from the recession ¬– and many organizations falling into deeper decline. So before you run to the hills to plead for tax cuts, remember to keep it reasonable.
Deep Cuts Mean Revenue Losses
Kansas’ tax cuts in 2014 alone cost the state about eight percent of the revenue it uses to fund schools, health care, and other public services – a hit comparable to a mid-sized recession. Unless laws are reversed, that number is expected to rise to 16 percent within the next five years – a figure that could prove disastrous for public organizations.
Lopsided Benefits for the Wealthy
Despite such low percentages, Kansas’ tax cuts didn’t benefit everyone. In fact, most of the benefits went to high-income households. And to add insult to injury, Kansas actually raised taxes for low-income families to offset revenue loss.
Dwindling Economy
While some expected such drastic tax cuts to help boost Kansas’ economy, data proves the opposite. Since the institution of these cuts in early 2013, Kansas has added new jobs at a pace much slower than the rest of the country. And the earnings and incomes of Kansans have been lower than the rest of the country, as well. The one exception? Kansas state farmers who are experiencing tax breaks that are almost laughable in scale.
Kansas Farmers Save How Much?
Kansas farmers may have it easier than any others in the country, with tax breaks so extreme that many farmers themselves have begged for reform. In addition to forgoing income taxes, farmers also pay no state income tax on subsidies they get from Washington. And the savings are enormous. In 2014 alone, farmers paid no state income tax on:
All in all, roughly 40,000 farmers receive approximately $1 billion a year from the US Department of Agriculture – and not a single penny of it is taxable. In every other state, most subsidies are considered taxable income.
These few points are just the tip of the iceberg. The fact of the matter is, that while seemingly loathsome, state taxes are a much needed resource for a state’s economic stability. And while tax cuts may seem great on paper – shoot, who wouldn’t love to pay less?! – cuts that are too extreme benefit no one. Just ask our friends in Kansas.
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