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“The basic assumption of your draft regulations appears to be that top down, Washington driven standardization is best…. You are funding teaching interventions or changes to the learning environment that promise to make public education better, i.e. greater mastery of what it takes to become an effective citizen and a productive member of society. In the draft you have circulated, I sense a pervasive technocratic bias and an uncritical faith in the power of social science.”

Was it:

(A)   Then Kansas Senator (now Governor) Sam Brownback

(B)   Then Texas Governor Rick Perry

(C)   Then California Attorney General  (now Governor ) Jerry Brown

(D)   Missouri Governor Jay Nixon

If you guessed Sam Brownback, you would be wrong. It was actually Democrat Jerry Brown.  Yes, that Jerry Brown.

This quote resurfaced in an interesting piece by Matt Barnum of education website The 74 about California’s long-running opposition to federal education policy. Brown’s riposte was a harbinger of the showdown that California ultimately had with the Department of Education in 2013, when California suspended its standardized testing and school rating system. The feds said they couldn’t do it and threatened to withhold funding. Brown responded more like a Texan than a Californian and dared them to come and take it.  The feds backed down.

I think there are two interesting lessons to take away from this story (which is worth reading in full).

First, states can stand up to the federal government. It obviously helped California that it is the most populous state in the union and is one that will reliably deliver Democratic votes, but even with that said, it is clear that the federal government is loathe to pull funding that overwhelmingly benefits poor students and students with special needs. That is not to say that they wouldn’t, but states are probably in a stronger bargaining position than they realize.

Second, the issue itself matters. California picked a smart issue on which to go toe to toe with the Department of Education. Had the feds been opposing standardized tests and the states supporting them, the calculus would probably be much different. A hardline stance might not work with an issue with more divided opinion or one where the federal government has the majority opinion on its side.

I don’t know if what California is doing is right or wrong. I’m by no means a technocrat, but I think they probably swung too far in the opposite direction on testing and school accountability. That said, part of respecting local control of education is realizing that not everyone is going to make the decisions that you would have made had you been part of the process. Agree or not, we can learn from California about what states can do when they feel they have been pushed too far, and we can recognize the need for states to have a game plan in place in case they are asked (or ordered) to do things expressly against the will of their citizens.

The post They Fought the Feds, and the Feds Lost! appeared first on Show-Me Institute.

Under the poor leadership of Gov. Sam Brownback and the Republican-controlled Legislature, Kansas has severe funding problems brought on by irresponsible tax cuts. But for the sake of Kansans with severe mental health needs, lawmakers should plug the financial holes so the state hospitals can provide good security and services.

This is at least the second time the Star has examined the topic, having done so last summer as well. Our response now is the same as it was when the Star was seeking a tax abatement extension that it was eventually granted:

The Star is asking to extend for 15 years the tax abatement on its downtown printing press. As a result, the Community Mental Health Levy in Jackson County, Missouri, will be denied $245,000 over 15 years. That is a quarter-million tax dollars from the Star's single property.

The Show-Me Institute welcomes any discussion of policies surrounding taxation and government spending. But it seems disingenuous for the Star to criticize tax cuts in Kansas when it seeks them for itself in Missouri.

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Liberals love to hate Sam Brownback, and for good reason. The Kansas governor threatens a central tenet of liberal orthodoxy: the belief that higher taxes are a price that must be paid for progress.

“If your objective is to grow the economy, would you rather put more money into government, or leave it in the hands of small business?” Mr. Brownback asks during a recent interview in his office at the state capitol. Three years ago Kansas enacted the biggest tax cut of any state, relative to the size of its economy, in recent history. Lawmakers reduced the top rate on the personal income tax to 4.9% from 6.45%. They also eliminated the income tax for small business owners who file as individuals, a broad group that includes sole proprietors, limited liability partnerships and S-corporations.

The governor declared that Kansas was “open for business” in such strong terms that he might as well have donned a sandwich board reading “Come to Kansas / Keep Everything You Earn.” He boasted: “Our new pro-growth tax policy will be like a shot of adrenaline into the heart of the Kansas economy.”

The comment was subsequently picked up by critics who wondered why the Kansas economy wasn’t suddenly leaping ahead at, say, 4%-5% growth annually. When Mr. Brownback ran for re-election last year, national reporters descended on the Sunflower State and quickly made Kansas the national symbol for the alleged depredations of “trickle-down economics.” A sampling of headlines includes: “How Tea Party tax cuts are turning Kansas into a smoking ruin,” L.A. Times, July 9; “Kansas’ Ruinous Tax Cuts,” the New York Times, July 13; and “The Great Kansas Tea Party Disaster,” Rolling Stone, Oct. 23.

Yet voters re-elected Mr. Brownback by a four-point margin. What the news coverage missed was that if Kansas hasn’t exactly catapulted into the front ranks in economic growth and employment, then it has at least moved a long way from the stagnation of recent decades. Consider:

• In March 2013, unemployment in Kansas stood at 5.5%. It has since dropped to 4.2%, tied for 14th lowest in the country.

• From 1998-2012, Kansas ranked 38th in private-sector job growth, according Bureau of Labor Statistics data crunched by the Kansas Policy Institute. In 2013—the first year after the tax reform—the state climbed to 27th place, and in 2014 it moved to 21st, placing it in the top half of states.

• In the second half of 2014, hourly wages in Kansas grew 3.5%, according to BLS data, far faster than the national average of 1.9%.

Then there is the Kansas City metropolitan area, a living laboratory that straddles the border with Missouri. On Mr. Brownback’s side of the divide, the top personal income-tax rate is now 4.9%, beginning at $15,000 for single filers; in Missouri the top 6% rate starts at $9,000.

“I just think Kansas City is a great study,” the governor says. “This is an unusual place, where you’ve got a city virtually equally divided between two states.” The results? Over the past two calendar years, private-sector jobs increased by 5.6% on the Kansas side and only 2.2% on the Missouri. In the same period hourly wages grew $1.22 on the Kansas side, compared with $0.61 on the Missouri side.

To Mr. Brownback, those kinds of statistics show the success of his tax cuts. He says a reporter recently asked whether he could “definitively say this wouldn’t have happened” without the reforms. “We don’t have the studies that say that,” he replies, “but we’re in terrain that we have not seen before—and it’s good terrain.”

Such results make intuitive sense. Patti Bossert, who owns two employment agencies in Topeka, estimates the tax cuts saved her firms $40,000 last year. Seeing a windfall on its way, she spent $375,000 to buy and remodel an old building for a new company headquarters. “Our business has been phenomenal,” she says. “Wages are going up, and the big problem now is that there are many more available job openings than there are qualified people to fill them.”

Critics contend that Mr. Brownback’s tax cuts have blown a hole in the state budget—$344 million in the 2015 fiscal year and $600 million in the next. The governor is filling those gaps by moving money from highway projects and delaying some public pension contributions. He has also proposed raising cigarette and alcohol taxes and pausing some of the tax cuts still scheduled to take effect. But he insists that the state will maintain a balanced budget and at the same time “continue our march to zero income taxes.”

Even so, Ms. Bossert worries that budgetary issues could cause the legislature to roll back the tax cuts. “Kansas can’t afford to break the promise it made to small business in 2012,” she says. “We have to stay the course to reap the real long-term benefits of this reform.”

If Mr. Brownback has anything to do with it, Kansas will stand firm. The governor expresses mild regret that his use of “colorful language”—the shot of adrenaline line—became a distraction. But he’s still eager to take on liberal assumptions across a host of issues, including the best way to eliminate poverty.

“I love the debate on wage growth because the left wants to push mandatory minimum-wage growth,” he tells me. “They want to do it by statute, and we will do it by growth.”

Mr. Wilson is a resident fellow and senior writer at the St. Louis-based Show-Me Institute.

The post Seeded With Tax Cuts, Kansas Harvests the Benefits appeared first on Show-Me Institute.

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In addition to recycling the tired “What’s the matter with Kansas?” cliche, the piece seems to believe that school funding drives education excellence. The piece concludes:

Kansans rightfully take pride in their strong public school system. But as Kansas goes, so may go the nation. The Kansas Constitution, like those in other states, demands that every child be given the educational opportunity to meet his or her promise. This requires, at a minimum, adequate and suitable school funding. Governor Brownback and legislators must meet the constitutional command and, by so doing, advance the core American value of equal opportunity for all.

My colleague James Shuls has addressed the canard that increasing education spending increases results; it doesn’t. The “worst in the country” Kansas City (Mo.) School District spends more than $16,000 per pupil. Imagine how much better educated The New York Times must think those students are than, say, Kansas’ neighboring (and nationally renowned) Blue Valley Unified School District, which spends an offensively low $7,361 per student.

The Times point would be more effective if there was evidence that the additional spending will help Kansas schools meet the goals the state constitution sets for them. There isn’t any such evidence.

The post It’s Not The Money appeared first on Show-Me Institute.

TOPEKA, Kan. (AP) — Proclaiming Kansas “open for business,” Gov. Sam Brownback on Thursday signed into law a measure that makes additional income tax cuts over the next five years while generating new revenue through higher sales taxes and other adjustments. …

Conservative Republicans pushed the initial cuts through last year while acknowledging that the plan was too aggressive and would need refinement in 2013. Those changes in the bill signed by Brownback on Thursday include decreasing income tax deductions over time as overall rates drop, as well as giving a less generous standard deduction for married couples and single parents.

The top in personal income tax rate [sic] will drop to 3.9 percent for 2018, down from 4.9 percent, and promises future rate reductions in years when revenues grow more than 2 percent.

Notably, Kansas’s lowest income tax bracket will also drop, from 3 percent to 2.3 percent. And taken together with last year’s cuts, Kansas’s new cuts put the state on track to return nearly $4 billion to Kansans over the next five years. Huge.

There was a great deal of talk last week about how “progress” had been made to end the Kansas-Missouri economic border war, but the “progress” appears to boil down to Kansas deciding that it will drink Missouri’s milkshake, and Missouri hoping for a handshake in return. That’s a bad, bad deal, and that deal will only get worse the longer Missouri does nothing to lighten the state’s tax load on its families and businesses.

The post Milkshakes and Handshakes: Brownback Signs Another Kansas Tax Cut appeared first on Show-Me Institute.

Don’t believe it? If so, that’s only because our governor and most of our lawmakers and business leaders have yet to wake up to what has happened.

For many years now, the economic development agencies in both states have fought to a draw, poaching business from each other through targeted tax credits and other subsidies to induce individual businesses to move from one side of the border to the other. Local governments have compounded the problem by offering tax incentives of their own to cater to a tiny contingent of well-connected companies, choking funds from libraries, schools, and other public services dependent on local tax revenues.

This high-stakes game was a win-some-lose-some proposition for both states, played out in a particularly frivolous way in the Kansas City region when corporations moved a handful of miles one way or the other to gain a temporary tax advantage – a situation not unlike the short-sighted Tax Increment Financing (TIF) wars seen in Saint Louis County. Then Kansas got serious about economic growth.

In May, Kansas Gov. Sam Brownback signed the biggest tax cut in the state’s history. The new law cuts the top personal income tax by more than a point to 4.9 percent, well below Missouri’s top rate of 6 percent. That would be cause enough for concern in Missouri if that was all Kansas had done. But more boldly, Kansas cut its tax on the non-wage pass-through income of businesses such as limited liability corporations (LLCs) and subchapter-S corporations (S-Corps), reducing taxes on the income generated from approximately 191,000 Kansas businesses to a rate of zero. Millions of small businesses nationwide are organized as LLCs and S-Corps that enjoy many of the legal benefits of a traditional corporation while being taxed like partnerships. A tax rate of zero on this income is awfully hard to beat, freeing capital for Kansas entrepreneurs to reinvest in their businesses and spend in the market.

The excitement brewing in Kansas does not have to stop there. Missouri may not have the chance to be the “first” to embark on the sort of economic development revolution taking place in the halls of Topeka, but it does not have to be the last. Significant and similar tax reductions and reforms are achievable in Missouri, if there is a political will for it in Jefferson City.

But what happens if Missouri does not act? The state will almost certainly be left behind — not only by Kansas, but by other smart, pro-growth leadership across Missouri’s western border. This year, Nebraska cut its personal income taxes and has primed the pump for future reductions. Oklahoma is seriously considering phasing out its income tax entirely, including deep near-term rate cuts.

If Missouri lawmakers do not arm the state with sound, broad-based, free-market tax reforms of their own, the state risks economic defeat at the hands of her cross-border rivals in one of the most important games imaginable: the one that will determine our future prosperity. We can turn this game around, but time is running out.

Brenda Talent is executive director and Patrick Ishmael is a policy analyst at the Show-Me Institute, which promotes market solutions for Missouri public policy.

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Not unexpectedly, Kansas Gov. Sam Brownback received an “A” — in fact, the only “A” among the states that border Missouri. Edwards makes particular note of the massive tax cuts Brownback enacted this year, lowering personal income taxes and ending taxation on income derived from certain businesses. As Rex Sinquefield and I observed last Friday, that move was a big, big play for Missouri businesses that the state must address. Edwards also highlights the fact that Brownback “signed into law needed pension reforms for state workers, and he has abolished some state agencies.” The governors in Nebraska, Oklahoma, and Iowa also earned good grades, each scoring a “B” on Cato’s report card. It is worth reiterating: This is all occurring on Missouri’s doorstep.

And Missouri’s governor? Citing in part “Tax Credits as a Tool of State Economic Development Policy” — a Show-Me Institute study — Edwards assigned Gov. Jay Nixon a grade of “C,” noting that while taxes have not really risen in the state, “tax incentive disease runs rampant in Missouri, as it does in many states.” (Indeed, Missouri’s love affair with tax incentives is unfortunately bipartisan.) Interestingly, the ratings of governors in our nine-state region, generally speaking, get worse the farther east you go.

You can find Cato’s full study here.

The post Kansas Governor Earns ‘A’ On Fiscal Report Card; Missouri Governor Gets ‘C’ appeared first on Show-Me Institute.

Highlights of the Brownback Plan include:

• Lower the top individual income tax rate from 6.45 percent to 4.9 percent (Missouri’s is 6 percent).
• Double the standard deduction to $9,000 for head-of-household filers.
• Eliminate various tax breaks, including those for home mortgages and earned income.
• Eliminate individual income taxes on non-wage business income like limited liability companies.
• Preserve the 1-cent state sales tax.

Now, the plan is described as “close to revenue neutral” and the article quotes a legislator who states “the devil is in the details,” and I happen to agree. However, this proposal points Kansas in the right direction. Any attempt to lower tax rates and broaden the tax base (i.e., closing loopholes and ending tax breaks) should be commended. Is Missouri going to follow (Kansas is not alone in proposing tax reform; Nebraska also is looking at cutting taxes)? State officials in Jefferson City have the opportunity, with the new legislative session, to make some serious changes and set Missouri on the right path to compete economically.

At the Show-Me Institute, we have proposed various tweaks in the state’s tax code that could be beneficial and make the state more competitive. Is Missouri going to move down this road, or are state officials going to continue promoting economic development debacles like Mamtek (and other projects that should remain dead), which make for good photo-ops but have resulted in a failure to grow Missouri’s economy?

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