About 45 years have passed since a U.S. state last eliminated its income tax on wages and salaries. But with recent actions in Mississippi and Kentucky, two states now are on a path to do so, if their economies keep growing.
The push to zero out the income tax is perhaps the most aggressive example of a tax-cutting trend that swept across states as they rebounded from the COVID-19 pandemic with surging revenues and historic surpluses.
But it comes during a time of greater uncertainty for states, as they wait to see whether President Donald Trump’s cost cutting and tariffs lead to a reduction in federal funding for states and a downturn in the overall economy.
Some fiscal analysts also warn the repeal of income taxes could leave states reliant on other levies, such as sales taxes, that disproportionately affect the poor.
Kansas tried something similar and it was such a disaster the Republicans had to repeal it themselves.
I don’t think the story will end well in Kentucky of Mississippi but Kansas had some existing problems that often get tied-in with Kansas’ tax reduction.
The people writing the checks for government expenditures were not following the budget submitted by the legislature. There was literally someone cutting checks based on what he felt was good policy. For years and years. He died. We only figured out the problem after he died and it turned out he was giving schools and school transportation a lot more money than he was supposed to. The Legislature would have made different spending decisions had they correct information abut the state of the budget. Massive oversight on the part of several administrations.
Kansas has poorer farmland than Iowa & Nebraska. Kansas has less oil than Oklahoma. And Kansas doesn’t have tourism like Colorado. Relative to our neighbors, we will continue to get poorer and poorer. The economic engine of Kansas (Kansas City) is split between two states and the “border war” frequently results in business playing both sides off each other until they get a deal so cheap that neither side should make the offer.
Kansas City is the economic engine of Kansas. The tax cuts reduced government spending (mostly school spending) in rural parts of the state. The tax savings was pocketed in a city where a lot of the money walked across the border. The overall state couldn’t make-up for what was being lost through that siphon but this may be a problem dissimilar to other states.
All that said, I do think good public policy is to have a wide but shallow system of taxation. Meaning that a state uses every type of tax (income, sales, property, estate, capital gains, etc.) but also tries to keep each tax relatively low so that the tax itself does not become the source of economic disruption. I feel like states that take one tax to zero but make it up with another tax are making things worse.
Turns out there are public services even Republicans still want. And you don’t please your base voters by bankrupting police departments and rural school districts.
Still, this is all contingent on some degree of democracy. If we’re just an oligarchy with a Two Minute Hate channel attached to it, we’ll get tax cuts followed by excuses. Blame the Haitians eating the dogs and the cats. Blame the mayor for killing peanut the squirrel. Then sit back and wait for the controlled opposition party to apologize for only half agreeing with you.
They’ll straight up disband public schools and all other public benefit before they defund police.
Jokes on them. If they cut tax revenue without a plan to cut costs, they’ll waltz right into defunding the police without even meaning to.
police is only useful to them, asa bludgeoning device. dictatorships have a strong police force, while makign thier own military weak, its by design.
Also, I suppose one way to get cars off the roads is to leave them in such severe disrepair that nobody can drive.
Can’t drive if you can’t afford fuel
Fuel is, curiously, the one thing we’ve managed to get cheap.
The rest of the economy is inflating like a blimp, but gas prices are as low as they’ve been in decades
For now; it’ll become an issue as the refineries start needing maintenance and all the parts and equipment have gone up in cost
The most eloquent description of the south I’ve heard recently.
AND THATS why they also have a dem gov, because they cant take the blame for everything, so they allowed a Dem to becom one of the state.