Governor Brownback spent most of the year developing his much anticipated tax reform plan. Although he has refused to disclose its membership, he relied on a “blue ribbon panel” to advise him on the recommendations. We do know that the State of Kansas paid ex-advisor to President Reagan and proponent of supply-side economics Arthur Laffer $75,000 as a consultant.
Dr. Laffer appeared before the House Tax Committee to share some of his thoughts on tax policy and to promote his new book Eureka. During his presentation he persisted in drawing the conclusion that if Kansas wants to prosper it must eliminate all income taxes. He cites states such as Texas, Nevada, Florida, and Alaska as poster children for his theory. These states he contends owe their growth and prosperity to the fact that they do not impose personal income taxes.
Dr. Laffer and other proponents of his theory, point to a “high correlation” between these states growth and their tax policy. But as any student of statistics and logic will tell you “correlation” does not mean causation. Because two events occur do not mean that one event caused the other. If I said that all felons ate potatoes prior to committing their crime, would you believe we should ban potatoes? Yet this is just what Dr. Laffer is doing with his logic.
There are many factors that differentiate our state from Texas, Nevada, Florida, and Alaska. Texas and Alaska have oil production and the subsequent severance taxes; Florida and Nevada have tourism industries that dwarf anything in Kansas.
Kansas is not the only state to have experienced budget problems and high growth, no income states have had even more challenges and deficits (as percentage of budget): Florida – 8.4%; Nevada – 37%; Texas – 20.4%.
The key to budget stability is to have a balanced tax structure that does not rely too greatly on any one element. In Kansas we have sales, income and property taxes that comprise the primary income source. But more importantly Kansas has a history of having a fair and progressive tax policy. The policies of Dr. Laffer and his cohorts ignore the fairness of our tax policy in favor of tax structures that favor the highest incomes at the expense of a the lowest.
