The Kansas experiment was a name given to a controversial and widely noted tax-cutting policy/agenda of Kansas Governor Sam Brownback that began with Brownback signing a bill cutting state taxes (Kansas Senate Bill Substitute HB 2117), in May 2012,[1][2] and ended with the Kansas legislature's repeal of the bill in June 2017. It was one of the largest income tax cuts in the state's history.[3] The Kansas experiment has also been called the "Great Kansas Tax Cut Experiment",[4] the "Red-state experiment",[5] "the tax experiment in Kansas",[6] and "one of the cleanest experiments for how tax cuts affect economic growth in the U.S."[7] The cuts were based on model legislation published by the conservative American Legislative Exchange Council (ALEC),[8][9][10][11] supported by supply-side economist Arthur Laffer,[12] anti-tax leader Grover Norquist,[13] and the influential industrialists Charles and David Koch.[14][15] The law cut taxes by US$231 million in its first year, and cuts were projected to total US$934 million annually after six years,[16] by eliminating taxes on business income for the owners of almost 200,000 businesses and cutting individual income tax rates.[16]
Brownback compared his tax policies with those of Ronald Reagan, and described them as "a real live experiment",[17] which would be a "shot of adrenaline into the heart of the Kansas economy",[18] and predicted that by 2020 they would have created an additional 23,000 jobs.[3] However, economic growth was consistently below average during the experiment,[4] and by 2017, state revenues had fallen by hundreds of millions of dollars,[19] causing spending on roads, bridges, and education to be slashed.[20][21] The Republican Legislature of Kansas voted to roll back the cuts; although Brownback vetoed the repeal, the legislature succeeded in getting the two thirds vote necessary to override his veto.[22]
Several reasons have been given to explain its failure. Economic growth under the new lower tax rates only generated enough new revenue to offset 10–30% of most of the initial tax cut, necessitating spending cuts to avoid deficits.[2]: 1 Kansas' elimination of pass-through income (projected to apply to 200,000 taxpayers, but used by 330,000) created a loophole which allowed many taxpayers to restructure their employment to completely avoid income taxes, thereby additionally decreasing revenue.[23]: 1 [2]: 1 According to tax policy theory, tax cuts generate only modest economic growth, which comes only in the long term, not in the short term.[24]: 1
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