States to residents, localities: forget promises to restore funding
Even some Republican state officials have been taken aback by the decisions to cut taxes before restoring some of the funding that has been cut.
“I really believe that we did not have a choice but to cut funding in the worst of the recession,” said state representative Charlie Roth, a Kansas Republican. “But this year, we did have a choice, and the choice we made was to give away money instead of re-investing in our children. That makes me doubt how sorry my colleagues were about the cuts in the first place.”
Remapping Debate asked several state Republicans how they can justify enacting tax cuts during this session in light of their supposed reluctance to cut funding in past years.
Arizona State Representative Victor Williams said of proposed education cuts in 2010, “The good choice [versus] the bad choice doesn’t exist anymore. They’re all poor choices.”
When asked for this article why he did not choose to restore some of that funding this year, Williams said, “Because we are not out of the woods by any measure.”
And what about the money for tax cuts? “We think of [the cuts] as economic development,” he said, “and that’s our priority right now.” (See bottom box titled “Rationales for further tax cuts.”)
In 2011, when Kansas Governor Sam Brownback cut more than $50 million from public schools, he said, “I wish we didn’t have to do this. It’s been difficult, but it’s something we need to do.”
Remapping Debate asked Brownback’s spokesperson, Sherriene Jones-Sontag, why, if he wished not to make the cuts in the first place, the Governor chose to reduce taxes this year instead of restoring those spending reductions, but the only answer she gave was that, “The Governor believes that the state government should live within its means.”
Rationales for further tax cuts
Aside from fulfilling the goal of shrinking the size of governments, the primary justifications used for tax cuts around the country has been the belief that the cuts will improve the economic climate, luring businesses to low-tax states, thereby creating jobs and, it is hoped, greater revenue from the taxes that remain. “It is my fundamental belief that when you cut taxes, you increase revenue,” said Owen Donohoe, a Republican State Representative in Kansas.
Thus, many advocates of tax cuts do not accept the projected fiscal impacts of the cuts from independent legislative analysts. The evidence for their position that cutting taxes will actually increase revenue, however, is sparse. In fact, there is substantial evidence to the contrary, including a recent, comprehensive analysis of state fiscal policy by economists at Tulane University that found tax and spending cuts in states are actually associated with lower economic growth.
According to Kim Rueben of the Tax Policy Center, the claims of these Republicans are examples of “supply-side economics,” a doctrine that gained prominence during the Reagan Administration, but has since been rejected by most economists and budget analysts. “I don’t understand how 30 years later, people still believe that cutting taxes increase revenue,” she said. “I don’t want to impugn their honesty, but if they truly believe this, then we are not looking at the same evidence.”
Kim Rueben pointed out that another common justification for the tax cuts has been the perceived need to compete with bordering states that have lower tax rates. Lawmakers in Oklahoma and South Carolina, for example, said that their states were uncompetitive with states like Texas and Florida, which have no income tax.
What Reuben called the “beggar thy neighbor philosophy” has also been followed by the conservative American Legislative Exchange Council (ALEC), a partnership of corporate leaders and like-minded state legislators, in crafting “model legislation” for adoption in the states. Several of the lawmakers who proposed the largest tax cuts in the last legislative sessions were members of the organization. ALEC’s analysis, too, has been fiercely challenged by the Institute on Taxation and Economic Policy and others.
“Beggaring thy neighbor is not a long-term economic strategy,” Rueben said. “It is not building new industries and creating new jobs. You’re just giving the businesses that are already there a present.”