The Tax Experiment That Failed

In 2012, Kansas passed one of the largest income tax cuts in the state’s history. Today, it serves as a cautionary tale.

In May 2012, all eyes were on Kansas as its former governor, Republican Sam Brownback, signed into law “the nation’s most aggressive experiment in conservative economic policy,” as Russell Berman wrote in The Atlantic. Kansas Senate Bill HB 2117 was one of the largest income tax cuts in the state’s history, entirely eliminating income taxes for the owners of nearly 200,000 pass-through businesses and decreasing taxes by 25% for the highest income rates. Brownback compared his fiscal policies with Reaganomics and promised a “prosperous future” for Kansas. He argued the cuts would pay for themselves by creating jobs and boosting the state’s economy.

It didn’t happen. The cuts threatened the viability of Kansas’s schools and infrastructure; in the first year they were implemented, they resulted in a $700 million revenue loss for the state. In 2017, the Kansas legislature voted overwhelmingly to restore the state’s tax rates.

A new documentary from ITVS Independent Lens investigates the legacy of the bill through the eyes of Kansas taxpayers. Director Melinda Shopsin traversed the state and interviewed anyone who would talk to her, including people at a local BINGO night, schoolteachers, farmers, small business owners, and employees at a hospital and a zoo. “Our focus was to talk to regular Kansans and get away from the divisive political rhetoric that seemed to be a hallmark of reporting on the tax experiment,” Shopsin told The Atlantic. “We wanted to hear from taxpayers what the policy had meant for them, so we just tried to put ourselves in ordinary places in Kansas where we would meet people.”

Although Shopsin was surprised to find that many Kansans did not seem to know about Brownback’s radical tax plan at all, others “were knowledgeable about the cuts had an unexpectedly deep appreciation for the importance of tax revenue,” she said. “We talked to a lot of folks who were surprisingly thoughtful about funding schools and roads. They explained that when the funding for those items disappeared, they really had to think about the importance of where their tax dollars went to.”

Melissa Hildebrand Reed of Hildebrand Farms Dairy explains in the film that had her family’s business benefited from the tax cuts (they didn’t), the Hildebrands would have allocated that extra revenue to automation on the farm, which would have eliminated employment opportunities there. “That theory of trickle-down, while it’s novel in concept,” said Hildebrand Reed, “I feel like Kansas has proven that that isn’t something that is gonna occur short-term.”

I asked if Shopsin had tried to track down citizens who benefited from the tax cuts. “We did, and it was not easy!” she said. “We ran into a few citizens who stuck up for the plan, but they were rare and in the minority. You see a woman in the diner [in the film] who defends the cuts, for example. But many of the people who did benefit from the cuts still saw it as a failure. What we heard over and over, off the record, was how unfair these cuts were in practice. For example, some doctors and lawyers were exempted from income tax because of their pass-through businesses, while their secretaries and nurses needed to pay it.”

“Quite frankly, I think the experiment failed,” echoes Randy Peterson, President and CEO of Stormont Vail Health, in the film. “We did not see the economic upturn that was projected. We haven’t seen this big influx of industry and organizations wanting to relocate to Kansas because of these tax cuts, and that was the projection. I’m a little concerned that we have the same concept at the national level now.”