Thursday, January 24, 2013

Starving the Beast on Steroids

The New York Times features a story this morning about Kansas and the efforts by state Republicans there, lead by Governor Sam Brownback to eliminate the state's income tax. Here's 90% of what you need to know about this plan:
The bill included the repeal of tax credits for food, rental housing and child care that benefited low-income residents. Because of those repeals, the poorest 20 percent of Kansans will spend an additional 1.3 percent of their incomes, an average of $148 per year, on taxes, according to a report by the Institute on Taxation and Economic Policy. The top 1 percent, meanwhile, will see the share of their income that goes toward taxes drop by 2 percent, or $21,087 per year, the report said.
The other 10% of the plan is a reminder of class "starve the beast" conservative policy. A concept I first heard through Paul Krugman, it works like this: Let's say you're a conservative and you want less government, but people really like the level of government they have broadly. Well if you can't kill the program, you kill the revenue stream. You cut taxes because when isn't that popular? And then as the tax cuts bite and the state lacks revenue to pay for the government people like the people are told, "Listen, we need less government or we need to raise your taxes." It's a dangerous game of chicken to play with dire financial consequences if it doesn't work.

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