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Abstract: 

In 2012, Kansas was the first state to eliminate pass-through business income taxes for LLCs, partnerships, and S-corporations. It also lowered the personal income tax rate in its 2012 and 2013 legislative sessions. Proponents of the tax cuts argued that they would stimulate the economy by creating jobs at a higher than historical rate and would thus have a minimal effect on the budget. This research documents when legislators began discussing the tax cut proposals through the repeal of the tax cuts. The consequences of the tax cuts was a significant decline in income tax that led to a structural deficit in the Kansas budget. The deficit necessitated an extended series of difficult choices for legislators on how to balance the budget. The tax cuts also led to credit downgrades, increasing debt, and a series of lawsuits over court funding of K-12 schools, among other problems. Studying the Kansas experience is important because several states and the Tax Cut and Jobs Act of 2017 followed this model of tax cuts.

Keywords: Kansas tax cuts, Kansas budget, Kansas credit downgrades, Governor Brownback, Tax Cut and Jobs Act of 2017

Affiliations:  1: University of North Carolina at Charlotte.