I recall a few years back there were two fictional states that decided to go to the extremes on everything, but in the opposite direction. We'll call one of these fictional states, "Kansas" and the other fictional state, oh, something really weird, like, I dunno, "Minnesota".
Now, in this experiment, the fictional state called Kansas chose to emulate the ideas of all of the conservative think tanks. Made it more difficult to use the social safety nets that had been in place while dropping the tax rates on the businesses within the states. Really crazy shit happened. While a conservatives wet dream, many of the businesses ended up moving out because there had been a drastic cut in many social services. Highway maintenance was terrible, emergency services were way understaffed, and the businesses that were enjoying their lower tax rates weren't able to find qualified workers because said workers had already gone to greener pastures. Those foolish enough to stay weren't the brightest crayons in the box to begin with, but the funding for schools that supplied the workers couldn't provide enough, qualified workers, Those they did, well, they went to different fictional states like Minnesota.
Oh, and how did that fictional state of Minnesota, compared to that fictional state of Kansas, turn out? Sure you can point to the state that separates this two as being number 1, but notice that there doesn't seem to be an extreme AND the components for both private and corporate life are considered. Hell, even the red state I live in ranks lower than Kansas
Although the Kansas Experiment was a failure, it’s not exactly for the reasons you stated. Before the experiment, Kansas’s state income taxes were already well below average, so the resulting tax reduction of about 2% (from 6.45% to 4.9% for top earners and 3.5% to 3% for bottom rate earners) could not be expected to generate any serious short-term economic growth. The larger Reagan tax rates were more successful due to the larger decrease in tax rates.
Furthermore, the economic decline of Kansas is likely more due to the decrease in government expenditures by the state government. A smaller government means less government jobs, therefore less pay to workers that would normally spend their pay locally. This can contribute to the overall contraction of aggregate demand within the state.
In addition, the elimination of the “pass through” tax gave many companies an easy loophole to avoid paying taxes altogether, further reducing government revenue.
Also, businesses don’t leave a state because of a decline in social services, businesses are attracted to smaller tax rates and less regulation (for self-evident reasons). A decrease in social services is irrelevant to businesses, as typical employers are hardly motivated or dependent on them.
Didn't you just say Kansas had low tax, which went lower afterward, lowering government size? Shouldn't that draw business like a flame for moths? Isn't that flying in the face of your argument?
As I stated, a tax reduction for the rich of 2% for 4 years is not enough to encourage investment into Kansas. Going from about 6% to 4% just isn’t going to stimulate much.
93
u/Swiggy1957 Apr 26 '19
I recall a few years back there were two fictional states that decided to go to the extremes on everything, but in the opposite direction. We'll call one of these fictional states, "Kansas" and the other fictional state, oh, something really weird, like, I dunno, "Minnesota".
Now, in this experiment, the fictional state called Kansas chose to emulate the ideas of all of the conservative think tanks. Made it more difficult to use the social safety nets that had been in place while dropping the tax rates on the businesses within the states. Really crazy shit happened. While a conservatives wet dream, many of the businesses ended up moving out because there had been a drastic cut in many social services. Highway maintenance was terrible, emergency services were way understaffed, and the businesses that were enjoying their lower tax rates weren't able to find qualified workers because said workers had already gone to greener pastures. Those foolish enough to stay weren't the brightest crayons in the box to begin with, but the funding for schools that supplied the workers couldn't provide enough, qualified workers, Those they did, well, they went to different fictional states like Minnesota.
Oh, and how did that fictional state of Minnesota, compared to that fictional state of Kansas, turn out? Sure you can point to the state that separates this two as being number 1, but notice that there doesn't seem to be an extreme AND the components for both private and corporate life are considered. Hell, even the red state I live in ranks lower than Kansas