It makes sense, doesn’t it?
If government lowers taxes, then people will have more money to spend, employers will have more money to hire employees, and the resulting economic boom will actually increase the revenue collected by the state and will benefit all classes throughout the economy.
It’s called supply-side economics and it has a corollary called trickle-down economics and it makes sense. Except when it doesn’t. And as the past 30 years have demonstrated, the times when it doesn’t work are, like, always.
Take Wisconsin, where Gov. Scott Walker has parlayed his conservative economic policy into serious talk about him being a presidential candidate. Seriously. Never mind the recent headline in The Washington Post that read, “Scott Walker cut $541 million in taxes last year. Now his state will miss a $108 million debt payment.” And never mind the text of that article, which includes mention of “the state’s $283 million budget shortfall this year.”
Yes, it’s looking bad in Wisconsin. Assuming that you appreciate things such as education and social services and the notion that being part of society means we have a shared commitment to each other. But as Wisconsin wallows in the practical implications of supply-side economics, the good people of The Badger State can embrace a new mantra: “At least we aren’t Kansas.”
In 2012, you see, Kansas Gov. Sam Brownback pushed through tax cuts that totaled $231 million in their first year and were scheduled to grow to $934 million after six years. According to the Official Supply-Side Economics Manifesto, the streets of Kansas should be paved with gold by now as the citizens feast on milk and honey. Except that The Kansas City Star recently noted that “a beleaguered Brownback has proposed hundreds of millions of dollars in cuts to education, roads and pensions.” And that “high-tax states have been generating employment at a faster clip than the Sunflower State for the last two years.” And that “Kansas is lagging in taking in enough money to provide good public services to its residents.”
Now, these examples might be exceptions to the rule. Two states do not a trend make, and tax cuts, after all, are destined to boost the economy. We know this because Ronald Reagan said it was so. But then there was this recent headline on The Huffington Post: “This billionaire governor taxed the rich and increased the minimum wage — now his state’s economy is one of the best in the country.” Minnesota Gov. Mark Dayton, it seems, passed a $2.1 billion tax increase on high earners, and now his state has the fifth-lowest unemployment rate in the country and a median income that is $8,000 higher than the national average.
And don’t forget the fact that, since Reagan, the national economy has performed much better under Democratic Presidents Clinton and Obama than during three Republican terms under the Presidents Bush.
No economic panacea
Look, this isn’t designed to draw the issue along partisan lines. Having come to adulthood during the Reagan years, I was a true believer in supply-side economics. Reagan, after all, had the kind of charisma that could sell a washer-and-dryer to a nudist colony, and the economy improved under his watch.
Yet the examples of supply-side success are difficult to find in the decades since then. Sure, there are multiple factors that influence the economy, and presidents tend to receive too much credit or too much blame, but many modern Republicans blindly embrace ideology with little understanding of its real-world impact. The mantra: Support “job creators” and reduce “job-killing regulations.” The result: Policies that hamper growth.
Now, a reasonable argument can be made that wealth should remain in the hands of those who earn it, rather than being turned over to the government. That is a discussion worth having. But at some point, we probably should stop pretending that tax cuts are an economic panacea.
That makes sense, doesn’t it?
