What Happened in Kansas: The 2012 Tax Reform, the Economy, and Lessons for Us All
The tax reform that Kansas policymakers enacted in 2012 became one of the best known, and least understood, policy initiatives in recent memory. Proponents claimed that it would lead to an influx of businesses, jobs, and people into Kansas. Opponents predicted disaster for the state economy. Dennis Jansen’s analysis of the 2012 reform reveals that its effects were much less dramatic. Measures of employment, personal income, population changes, and GDP provide little evidence that the reform had a significant positive or negative effect on the state economy.
That said, there are important lessons to be learned from Kansas’s experience. Jansen explores the consequences of the failure to reduce spending concurrently with the tax cuts, the inaccurate growth projections that led to overly optimistic forecasts, and the difficulty of weathering the tax cuts’ short-term impact on government revenue while waiting for the long-term benefits of a better tax climate to arrive.
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