Policy Wonk

Kansas's 2012 income tax cuts

Headline result
4.2% vs 9.4%
private-sector job growth, Kansas vs US, Dec 2012–May 2017
Observational
Implemented by
State of Kansas
Type
State / regional government
Where
United States
Region
North America
When
2012–2017
Evidence
Observational / administrative data

The challenge

Kansas wanted to boost economic growth and jobs.

The case

In 2012 Kansas cut income tax rates sharply and eliminated taxes on certain business income, with Governor Sam Brownback calling it a 'real live experiment' that would supercharge growth. The promised boom didn't come: job and economic growth lagged neighboring states, revenues fell far short, and the state cut spending, drew down reserves and had its credit rating downgraded. In 2017 the Republican-led legislature reversed most of the cuts, overriding the governor's veto. CBPP reported Kansas' private-sector job growth was 4.2 percent between December 2012 and May 2017, less than half the 9.4 percent national rate.

Why it didn't work

Tax cuts did not pay for themselves. Exempting some business income also encouraged people to reclassify wages to avoid tax rather than create new activity.

Sources