Later On

A blog written for those whose interests more or less match mine.

A tale of two experiments: Tax adjustments in Kansas and California

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Kansas cut taxes drastically. The reasons offered are probably not the real reason (the real reason to allow the wealthy to keep more of their wealth), but the claim was that cutting taxes would boost their economy. And California raised taxes (and went all-in on Obamacare, which Kansas has fended off as best it can: no Medicare expansion, for example). Paul Krugman notes:

The states, Justice Brandeis famously pointed out, are the laboratories of democracy. And it’s still true. For example, one reason we knew or should have known that Obamacare was workable was the post-2006 success of Romneycare in Massachusetts. More recently, Kansas went all-in on supply-side economics, slashing taxes on the affluent in the belief that this would spark a huge boom; the boom didn’t happen, but the budget deficit exploded, offering an object lesson to those willing to learn from experience.

And there’s an even bigger if less drastic experiment under way in the opposite direction. California has long suffered from political paralysis, with budget rules that allowed an increasingly extreme Republican minority to hamstring a Democratic majority; when the state’s housing bubble burst, it plunged into fiscal crisis. In 2012, however, Democratic dominance finally became strong enough to overcome the paralysis, and Gov. Jerry Brown was able to push through a modestly liberal agenda of higher taxes, spending increases and a rise in the minimum wage. California also moved enthusiastically to implement Obamacare.

I guess we’re not in Kansas anymore. (Sorry, I couldn’t help myself.)

Needless to say, conservatives predicted doom. A representative reaction: Daniel J. Mitchell of the Cato Institute declared that by voting for Proposition 30, which authorized those tax increases, “the looters and moochers of the Golden State” (yes, they really do think they’re living in an Ayn Rand novel) were committing “economic suicide.” Meanwhile, Avik Roy of the Manhattan Institute and Forbes claimed that California residents were about to face a “rate shock” that would more than double health insurance premiums.

What has actually happened? . . .

Continue reading.

Experiments work best, of course, if you actually learn from them. The GOP seems unable to do the “learning” thing.

Written by LeisureGuy

25 July 2014 at 11:39 am

Posted in Daily life, Government

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