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OPINION

Big tax cuts come back to bite states: Our view

The Editorial Board
USATODAY
Kansas Gov. Sam Brownback

If it's true that states are the laboratories of democracy, where ideas can be road-tested before they go nationwide, it's just as important to pay attention to the experiments that fail as the ones that work.

Here's one worth steering away from: Governors in Louisiana and Kansas have been experimenting with big tax cuts that advocates claim will unleash explosive economic growth. The results have been dismal. Growth has been sluggish in both states, and the plunge in revenue has devastated both states' budgets:

  • In Louisiana, Gov. Bobby Jindal pushed a big tax cut through the legislature after he took office seven years ago. Since then, the state budget has gone from a nearly $1 billion budget surplus in 2007-08 to a projected $1.6 billion shortfall for the budget year that begins July 1. Jindal, who long ago took a pledge never to raise taxes, has cut higher education and resorted to unsustainable one-time remedies such as draining reserve funds and selling state assets.

Louisiana's jobless rate has gone from much better than the national rate in 2008 to much worse. Jindal claims his state's economic growth has beaten the nation's, but he cherry-picks the years and doesn't mention that since 2010, the state has lagged behind the national recovery.

  • In Kansas, Gov. Sam Brownback said in 2012 that his tax cuts would be like a "shot of adrenaline into the heart of the Kansas economy." Tax-cut advocates Arthur Laffer and Stephen Moore, who advised Brownback, said the reductions would provide a "near immediate and permanent" boost to the economy.

Well, in the two years since the tax cuts went into effect, private-sector job growth in Kansas has badly lagged the overall U.S. rate — 3% in Kansas vs. almost 5% nationwide. Meanwhile, the tax cuts have caused revenue to fall far short of expectations, and the shortage has caused Brownback to pursue damaging cuts in education and spend virtually all of the state's operating surplus. Some shot of adrenaline.

Of course, Republicans such as Jindal and Brownback don't have a monopoly on fiscal irresponsibility. Democratic governors have dangerously overpromised pension benefits to public-sector workers, creating huge budget problems that will in most cases arrive long after the politicians have left office. Excessive taxation and regulation can harm a state's business climate.

But the obsession with slashing taxes, budget be damned, is crazy. Despite the evidence from Louisiana and Kansas, the "supply-side" free-lunch dream — that big tax cuts will pay for themselves — lives on in Washington. In fact, House Republicans changed the rules this year to make it easier to cut taxes by claiming big economic benefits, whether that happens or not.

Perhaps the best news of the 2016 presidential campaign so far is former Florida governor Jeb Bush's refusal to sign pledges by lobbying groups, most notably the anti-tax vow promoted by Grover Norquist's Americans for Tax Reform. As Bush's father learned the hard way, "read my lips" is a promise best avoided by presidents and governors alike.

USA TODAY's editorial opinions are decided by its Editorial Board, separate from the news staff. Most editorials are coupled with an opposing view — a unique USA TODAY feature.

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