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Tags: income | tax | Brownback | Republicans

Republican Lawmakers Avoid Brownback-Style Tax Cuts

By    |   Friday, 26 December 2014 12:07 PM EST

Kansas Gov. Sam Brownback and his aggressive tax cuts were once the envy of Republican lawmakers who hoped to phase out their states' income tax collections, but now he's become more of a cautionary tale as his state faces serious shortfalls and Brownback nearly lost his election.

"It’s a cautionary tale on a national scale," Indiana state Senate Majority Leader Brandt Hershman, who worked with Gov. Mike Pence to cut corporate taxes last year, told Politico.

"We all like low taxes, but we have to ensure the stability of a revenue stream to provide basic services that our citizens expect."

Kansas is facing a $279 million revenue gap from shortfalls, and the state's credit rating has been downgraded. Other Republicans aren't skipping out on cutting taxes, but are now looking at enacting smaller cuts over longer periods.

In 2012 and 2013, Brownback signed a package that exempted 191,000 businesses from income taxes. Further, he dropped the top income tax rate to 4.9 percent from 6.45 percent, with plans to drop it even farther, to 3.9 percent by 2018 and to eliminate the tax to nothing if the state's revenue grew.

Brownback had hoped the tax cuts would spur new business and jobs, but that didn't happen, and now, state Budget Director Shawn Sullivan has told The New York Times  that some of the planned tax cuts may have to be scaled back.

In other states where Republicans governors have enacted drastic tax cuts, officials say they're not worried about facing the same problems as Kansas because their cutbacks have not been as drastic.

For example, Ohio Gov. John Kasich, who has already cut about $3 billion in taxes and expects to announce another cutback early next year, has taken a gradual approach that gives taxpayers a 10 percent tax cut over the governor's first three years in office.

In Georgia and Iowa, two other states looking to cut taxes, governors are saying they'll take a slow approach as well so that their states will not have shortfalls.

Iowa Ways and Means Chairman Rep. Tom Sands said he wants to eliminate income taxes, but plans to start out by offering an optional flat tax.

"Instead of just flat-out rewriting Iowa’s income tax code and doing away with all nine brackets … by doing the option, you’re letting people move to the direction they want to head, taking a little smaller step to where we need to go, [which] doesn’t create the huge swing you might see in a complete income tax rewrite," he told Politico.

Republicans have also learned from Brownback not to promise state residents and businesses too much when it comes to tax cuts.

"You can’t promise that everything is going to change overnight," said Jonathan Williams, top tax adviser for the conservative policy group American Legislative Exchange Council.

Further, tax plans like Brownback's won't work if there is not enough money to make them work, said Goldwater Institute senior economist Stephen Slivinski.

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US
Kansas Gov. Sam Brownback and his aggressive tax cuts were once the envy of Republican lawmakers who hoped to phase out their states' income tax collections, but now he's become more of a cautionary tale as his state faces serious shortfalls and Brownback nearly lost his election.
income, tax, Brownback, Republicans
494
2014-07-26
Friday, 26 December 2014 12:07 PM
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