| September 4, 2012

OCPA Memo ‘Played a Major Role’ in Historic Tax Cut

In an October 2010 memorandum (“A Tale of Two States: The Real Effect of Individual Income Tax Cuts”), OCPA research fellow Steve Anderson noted that “recent tax policy in Oklahoma and Kansas gives us the closest thing possible to a controlled experiment.” After looking at the evidence, Mr. Anderson, an accountant who spent two years as a budget analyst in the Oklahoma Office of State Finance, concluded that “putting money back into the hands of Oklahoma’s private sector will generate economic activity and boost Oklahoma’s economy.”

The memorandum was effective. Anderson told me last month that it “played a major role” in persuading lawmakers in 2012 to pass the largest tax cut in state history.

In Kansas.

Gov. Sam Brownback, who hired Anderson to be his state budget director, used “his political capital and GOP majorities,” The Wall Street Journal noted approvingly, to press “a reform agenda worth the effort.” As the Journal pointed out in an editorial (“What’s Right With Kansas”), “Governor Sam Brownback continued the post-2010 reform trend among GOP governors by signing the biggest tax cut in Kansas history. The plan chops the state income tax rate to 4.9 percent from 6.45 percent and eliminates income taxes on about 190,000 Kansas small businesses.”

Unsurprisingly, small-business owners in Kansas are pleased with the elimination of the income tax. The Wichita Eagle (“Kansas small-business owners say elimination of income tax is a big help,” May 24) quoted some who said “the elimination of the tax on business profits could prompt them to reinvest in their companies—such as buying new equipment.”

The Topeka Capital-Journal reported August 14 (“Laffer certain tax reform will supply economic renewal”) that “economist Arthur Laffer showered praise Tuesday on state business and individual income tax reductions ushered into law by Kansas Republican Gov. Sam Brownback.”

And given conservatives’ electoral triumph in Kansas on August 7, it looks like Gov. Brownback is just getting started. As the Associated Press reported August 8 (“Conservatives win big in Kansas Senate primaries”), “Conservative Republicans who’ve been working to push GOP moderates out of state legislatures in a large section of the country have scored big victories in Kansas, where a state Senate that has been an obstacle to fiscal and social policy changes is likely to have a solid majority on the right next year.”

For our part, as an organization committed to economic freedom, OCPA is pleased to know that our ideas are having an impact. We hope Gov. Brownback’s success—like that of Gov. Scott Walker—will embolden conservative policymakers in all 50 states.

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