Tuesday, February 12, 2013

Kansas Becomes First State with Negative Income Tax for Millionaires

“It’s the Right Thing to Do, These Multi-Millionaires Are Suffering” Says Ultra Conservative Gov. Sam Brownback

New That Didn’t Happen – But Might

Kansas is controlled by radical Republicans, and they are trying to implement their policies of low taxes and low government spending.  They want to be like Texas,

Mr. Brownback has boasted that his state is set to go head-to-head with Texas, which has neither a personal nor corporate income tax, in luring new businesses and residents. 

This policy is bound to fail, since Texas has so many things that Kansas does not, like oil, a vibrant and hard working Hispanic community, great weather and the like.  So Kansas will have to do more than just cut taxes to have a chance to achieve its goals.  Hence one might see a story like this in the coming years.
New York Times

Kansas to Pay Millionaires to Live in the
State – Expects Over 20 New Jobs From
Program That Costs $1.2 Billion

Topeka – June 11, 2015.  Kansas today became the first state to enact a negative income tax for those making $1 million and over.  The state had tried to stimulate growth by cutting taxes on high income individuals, and when that didn’t work Kansas moved to the next step, handing out money to millionaires.

“It is clear we needed to think outside the box” said Gov. Sam Brownback, “and we determined that if we just diverted tax revenue from low and middle income taxpayers to millionaires we would have the magic to stimulate our economy.  And it’s also the right thing to do” the Governor added.

Several years ago Kansas enacted huge tax reduction for high income tax payers, but the resultant reduction in state services like education, transportation and law enforcement created negative incentives for businesses to relocate the Kansas.  As the supply of trained workers declined and the crime rate rose many businesses moved from Kansas, creating high unemployment.  Only the denial of subsidized food and health care to those newly unemployed allowed Kansas to keep taxes low.

Economists at the Heritage Foundation and the American Enterprise Institute did research and concluded that Kansas had failed because it did not go far enough.  The studies said that Kansas need to provide a negative income tax of at least $100,000 per person for those making more than $1 million a year, and that if such a payment was funded by increasing taxes on food the state could easily afford the program.  The higher prices for food would result in “no more than 11% of the children in the state suffering from malnutrition” one study found.

While the announcement of the program has not resulted in a single millionaire moving to Kansas or investing in the state, Gov. Brownback and his supporters said that any lack of economic benefit paled by the huge benefit that the state would get from being known as the “Capital of Conservatism”. 

No comments:

Post a Comment