The Predicted Kansas Economic Collapse That Wasn’t

The Wall Street Journal has an interesting article on the state of Kansas’s economy post-Governor Brownback’s controversial 2012 tax cuts. If you remember the coverage then, the left went absolutely crazy that the gradual phasing out of state income tax, as well as complete abolition of corporate income taxes on small businesses, would drive Kansas’s economy into a Mad Max-style hellscape.

Not so. According to Andrew Wilson of the Show Me Institute, a Missouri-based free market think tank, writing in WSJ, the state of the state in Kansas is strong. Discussing what many liberal-leaning scare headlines missed about Brownback’s reforms, Wilson writes:

What the news coverage missed was that if Kansas hasn’t exactly catapulted into the front ranks in economic growth and employment, then it has at least moved a long way from the stagnation of recent decades. Consider:

• In March 2013, unemployment in Kansas stood at 5.5%. It has since dropped to 4.2%, tied for 14th lowest in the country.

• From 1998-2012, Kansas ranked 38th in private-sector job growth, according Bureau of Labor Statistics data crunched by the Kansas Policy Institute. In 2013—the first year after the tax reform—the state climbed to 27th place, and in 2014 it moved to 21st, placing it in the top half of states.

• In the second half of 2014, hourly wages in Kansas grew 3.5%, according to BLS data, far faster than the national average of 1.9%.

Then there is the Kansas City metropolitan area, a living laboratory that straddles the border with Missouri. On Mr. Brownback’s side of the divide, the top personal income-tax rate is now 4.9%, beginning at $15,000 for single filers; in Missouri the top 6% rate starts at $9,000.

Brownback has conceded in the piece, as he has elsewhere, that he may have over-promised the short-term benefits of tax reduction (infamously saying that the new rates would be a “shot of adrenaline to the arm” of the state economy), but after three years ordinary Kansans are starting to see the benefits of keeping more of their hard-earned money and smaller, more effective, more efficient government.

More on the success of Kansas tax cuts, and the over-hyping of the state’s miniscule deficit, here, here, here, and here.