What Do California and Kansas Have In Common?

(The following is written and submitted for publication on LeftWingCapitalist by Guy Heston.)

The governor is proposing to triple the tax on cigarettes! To add salt to the wound of those with certain vices he wants to raise the tax on most booze by 50%! That’s just the beginning! He wants to raise income taxes and spend more on teacher pensions and less on highways! This in a state that has a huge deficit! Good grief, can’t elected officials balance a budget?!! Forgive all those exclamation points, it’s just that as a taxpayer I get riled about taxing and spending and highway potholes.

I am not writing about California,
famous in many quarters for its taxing and spending and potholes. No, I write about the great state of Kansas, a state that is about as conservative as they come. Mitt Romney carried it by 27% in the 2012 presidential election. The only time since 1936 that Kansas went Democratic in a presidential election was 1964, when the Republicans went ballistic in a manner of speaking and nominated Barry Goldwater, who promptly got a paltry 38% of the popular and 10% of the electoral college votes, one of the biggest presidential election wipeouts in American history.

Kansas Republican Governor Sam Brownback recently unveiled his proposed budget with the higher taxes and more spending noted above because he was pretty much forced to do something inasmuch as Kansas is facing a $710 million budget shortfall this year. That’s no small amount of change in Kansas. It is hard to imagine such a financially well run and conservative state running such a nasty deficit, but there is a clear reason this has happened.

Governor Brownback made a big deal of saying that cutting and eventually eliminating personal state income taxes would stimulate the Kansas economy and more than make up for the lost taxes. A case study for trickle down economics. The Kansas Legislature went along with it, but so far the economics are not trickling down so well. State revenues have dropped so much that the $710 million deficit is the governor’s current estimate. Thus the proposal to raise taxes on tobacco and liquor and roll back the income tax roll back.

Meanwhile, here in the great taxing and spending and regulating state of California, we are running a huge state budget surplus. We are pumping additional billions into K-12 education, there are construction cranes all over the place (I am an eyewitness and vouch for it), freeway improvements are under way, and people are starting to complain again about the rise in housing prices. Believe it or not, Governor Brown is actually moving us to put aside money for a rainy day! (oops, another exclamation point.)

Let’s be fair to Kansas, because economically here is what the state has in common with California -- poor tax policies. In Kansas, the lesson is you can’t tax cut your way to prosperity unless your idea is to starve basic government services and have lots of potholes and less well educated children, if you care to call that scenario prosperity. In California, the lesson is tax policies that result in either boom or bust so the state is either awash in surpluses or suffering the slings and arrows of outrageous deficits don’t work so well either.