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Jerry Shenk


Kansas Tax Cutting Model for PA

by Jerry Shenk
 


Kansas tax-cutting plan model for Pennsylvania growth

By Jerry Shenk

Email: jshenk2010@gmail.com

Few Pennsylvanians know or care who Sam Brownback is, but we all should.

Brownback, a former US Senator, is governor of Kansas, a state which, in 2012, cut tax rates to promote job growth and stimulate the state economy. Kansas' highest income-tax rate was cut from 6.4 to 4.8 percent. To encourage job creation, personal taxes on small business revenues were eliminated. Ultimately, Brownback seeks to end Kansas' income tax.

Because Kansas job creation has historically lagged many other American states, Brownback's objective was to create long-term growth incentives.

The governor proposed placing strict focus on more efficient spending to eliminate the wastes intrinsic in large governments.

The legislature hedged its political bets by refusing to temporarily reduce spending to offset the tax rate reductions, so Kansas has experienced budget deficits, providing fodder for left-wing opponents who denounced the changes, claiming that Brownback's plan had failed.

The New York Times knows who Brownback is and has crusaded (in print and pixels) against him personally and against tax reform in a state half-way across the country. The Times realizes that, if Kansas' tax reforms work, its example will be applied far more broadly — that the failing liberal big-government model favored by the Time's staff and management will be at risk everywhere.

As all states do, Kansas has legal fiduciary responsibilities, so it's unclear what final form Kansas' tax structure will take, but it's instructive to learn what impact the tax rate adjustments have already had on the central objective of Kansas' tax plan: job creation.

Kansas shares a border and a metropolitan center — the Greater Kansas City area — with Missouri.

The Kansas Policy Institute recently reported: "[D]ata from the Bureau of Labor Statistics shows that Kansas had better private sector job growth in 2014 than neighboring states of Missouri, Oklahoma and Nebraska." KPI president Dave Trabert said: "You can observe firsthand businesses that have moved across the state border into Kansas in the Kansas City area."

Even with a smaller population, from 2012 to 2014, the Kansas side of the metro area produced twice as many jobs as the Missouri side due to Kansas' favorable tax rates.

Kansas unemployment has fallen to 4.5 percent; welfare dependency was halved; and Kansas employers are enticing qualified workers from higher tax states to become tax-paying Kansans filling new jobs at higher pay. KPI reported that, before the tax cuts, workers on the metro-area's Kansas side earned 40 cents per hour more than Missouri workers. They now make $3 more.

Kansas' tax policy has inspired its neighbors: Following Kansas' lead, the Missouri legislature is considering tax reforms; Gov. Mary Fallin is advocating cuts to Oklahoma's tax rates; and Nebraska's Gov. David Heineman introduced a bill to eliminate certain taxes, including on individual and small business incomes.

Pennsylvania needs jobs and new taxpayers, too, but rather than learning from and emulating Kansas-style tax reform, Pennsylvania's new governor is seeking more and higher taxes.

If enacted, Governor Tom Wolf's tax proposals will further set back the Commonwealth.

http://www.ldnews.com/opinion/ci_27895048/kansas-tax-cutting-plan-model-pennsylvania-growth


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