Kansas Mountains, a preenactment
Kansas is a pretty conservative state, more conservative than most. Kansas hasn’t had a Democratic senator since 1938, when George McGill, elected in 1930 to fill an unexpired term, lost his second bid for reelection. There was one other Kansas Democrat elected in the last century, in 1913. He lost in 1919. Maybe he won as a peace-time Democrat, that sort of thing happened before World War I, and it’s interesting that at some point we switched from electing senators in odd years to even. It clearly wasn’t a change that helped Kansas Democrats.
The current governor is a Democrat, and that happens in Kansas from time to time, not like all the time but every now and again, so maybe Kansas is less conservative than one might think. But over the last eight years Kansas was uncharacteristically prominent in the national news for a peculiarly conservative administration. Another governor, Sam Brownback, made Kansas the nation’s petrie dish for supply side economics. Brownback resigned the governorship to become President Trump’s United States Ambassador at Large for International Religious Freedom, and by the end of his second term when he resigned both Republicans and Democrats couldn’t get him out of Kansas fast enough. Hence there is now a Democrat in office–Brownback blowback.
In 2011 as a newly-elected governor Brownback pushed through radical tax reductions. Being a religious man, he had faith that if Kansas decreased taxation, the resulting economic stimulus would increase tax revenues. Common sense supports Brownback’s notions, at least somewhat: If you tax too much, say 100%, people won’t pay or won’t work and no taxes get collected. The generally accepted notion though isn’t that reduced taxation will always result in economic stimulus, but that there is an optimum level of taxation, a level at which necessary economic drivers like schools and roads and health care aren’t crippled, but the supporting taxes don’t themselves hold back the economy. In the Kansas Experiment, Brownback slashed rates of taxation in 2012 to lower tax revenues by $231 million. Brownback was certain that the reduced taxation would stimulate a slow Kansas economy, and promised more future cuts.
It didn’t exactly work. The Kansas economy continued to lag, and by 2017 the Kansas legislature had slashed expenditures on roads, schools, bridges, and other necessary stuff. The legislature, both Republican and Democrat, rolled back the tax rollbacks, and then overrode Brownback’s veto.
The notion that lower tax rates result in higher tax revenues isn’t new, and was the theoretical support for a number of U.S. tax cuts, even pre-Reaganomics, even by Democrats. Maybe its most famous association (other than with President Reagan) is with the economist Arthur Laffer, who in 1974 as a White House staffer sketched the Laffer curve onto a napkin for Dick Cheney and Donald Rumsfeld. Winner winner chicken dinner! I hope it was a paper napkin. I’d hate for a conservative administration to waste cloth napkins. On the other hand, maybe if it’s still around it could be like the Shroud of Turin, and we could charge admission.
Before that, in 1924, Secretary of the Treasury Andrew Mellon, he of Mellon Bank and one of our then-richest folk, wrote “It seems difficult for some to understand that high rates of taxation do not necessarily mean large revenue to the government, and that more revenue may often be obtained by lower rates.” At that time the marginal tax rate was 73%, and since as one of the .01% Mellon lived at the margins, maybe he had a better understanding of the result than most. The marginal rate was ultimately reduced to 24%, but then it was increased in 1932 at the outset of the New Deal to 62%. By 1951 following World War II, the highest marginal rate was 91%.
Tax optimization theory is not inherently conservative, but it does go hand-in-hand with a bulwark of conservative economics, Supply-Side Economics, dba trickle-down theory, dba voodoo economics. Supply-Siders believe that the economy is driven by production, by those willing and able to invest capital into producing more, and that the only way the economy grows is if production grows. Production only grows if the triumvirate of minimal regulation, stable monetary policy, and–here’s where tax reduction comes to play–low taxes spur producers to invest in production. It can’t, for instance, spur producers to go fly fishing in New Zealand instead of investing in production, because that’s not the sort of thing producers do. Consumption, the theory goes, will follow production, one supposes in part because of increased funds available to workers and in part because of the availability of goods. If you build it, they will come. Just look what happened to Iowa!
The direct counterpoint to Supply-Side Economics is Keynesian Demand-Side Economics. Give a consumer a dollar, and he’ll spend it on consumption, which in turn will spur production. I’m sure that there are Supply-Siders with complex calculations that prove Supply-Side is the very thing, and Demand-Siders with their own set of complex calculations that prove that Demand-Side is the very thing, and that I would make head-nor-tales of neither set of calculations. As a demonstration model though Kansas isn’t a very convincing proof for the Supply-Side. Maybe it failed because the state reduced tax rates for both the highest payers and the lowest? Maybe they should have increased taxation on the lowest to spur production? Maybe, but end of the day the Kansas economy started stagnant, and six years later was apparently still stagnant, and the state government was a mess. I hope Ambassador Brownback fares better with religious freedom, ‘cause if he doesn’t we’re all going to end up under Sharia law.
I’ve been thinking about Kansas a good bit, mostly because fishing Kansas is kind of intimidating to me. There are no fly fishing guides. There are no fly fishing guidebooks. It’s not a destination fishery and it’s a bit short on the fly fishing resources that destination fisheries usually have. I figure the cause must be a combination of high taxation and excessive regulation.
Just consider: fly-fishers like mountains, and Kansas is one of our flattest states. If mountain producers would just produce some mountains in Kansas, then fly fishers would flock there. If, for instance, mountain producers dug out the eastern portion of the state, and dumped the spoil in the west, Kansas could have both a mountain range and an inland sea: just add salt. Fly fishers would flock to both the mountains and the sea, as would bonefish, permit, tarpon, and trout. Clearly, the only reason that hasn’t happened is because of Kansas laws that discourage mountain and inland sea production, and the current high taxation on Kansas mountain and seaside property. If you produced a mountain in Kansas with a few good trout streams, I reckon just about everybody–not just fly fishers–would come to see it.
We need to get Governor Brownback back in Kansas.
