If tax hikes work so well to stimulate the economy, how come California, Illinois, and Maryland are experiencing similar or worse problems than Kansas is now?
The only two states that could be considered economically successful during the past 5 years are Texas and North Dakota, and both of those are part of that maligned group that have low taxes and "no basic government services". You can say what you want about whether they'd be better off if they followed different ideas, but lower taxes and fewer services has certainly not hurt their state to any significant degree. Also, I don't get this furor over the tax cut decreasing revenue - isn't it the whole point of cutting taxes for the government to take less money from people, so that those people can use that money to improve their own lives and make their own decisions about their future, thereby benefiting society as a whole? A decrease in revenue should be expected and planned for with spending cuts, and it appears that Kansas has fallen short in the planning department. Failing to cut spending enough is their problem, not cutting taxes - plenty of other places have cut taxes and not experienced these problems.
This whining about roads and firefighters is a red herring - if you add up spending on roads, police, and firefighters it comes to far less than the tax revenue that is coming in, so they could be fully funded with plenty left over. Most states' budgets are sucked up by welfare, schools, and medical care, and that triad of red ink is what is under strain, not police and firefighters. Government services in general do not add a cent to the economy - forcibly taking money from people in the form of taxes and sending it to some other purpose such as "government services" only redistributes funds in the economy; the act of taxing and spending does not create value or wealth of any kind, whereas the original owner of that money would have used it to create or purchase some value for himself and the other party to the transaction. Many here have fallen victim to the broken window fallacy, only considering what is seen without taking into account what is unseen. As Frederic Bastiat said in his essay:
Aside from the odd piece of infrastructure here and there, government taxation and spending follows this process - at best it only redistributes, neither creating nor destroying wealth or value, but at worst it sucks away money into a black hole that would have been used for far greater purposes by its owners.
One of the greatest black holes is medical care. Medicaid programs, which comprise the bulk of Kansas's health care spending, offer extremely dubious value for what is being spent on them; the most comprehensive study to date on the subject finds that
Medicaid had no significant effect on health outcomes versus being uninsured, and
Medicaid expansion actually increases ER visits, both of these contrary to the gospel of official Washington where "Medicaid helps people, ergo more Medicaid=more help"
. Medicaid does not make people healthier, and nationwide $400 billion is being taken from the public every year to fund this monstrosity that entails no benefits, representing a loss to the economy of $400 billion per annum - with that in mind, why shouldn't we abolish the program and let people use that $400 billion for other more enjoyable and productive purposes?
Education is another black hole. Per pupil spending has more than doubled since 1970 with no change in NAEP scores (
source) and no change in the perceived quality of the schools.
The total K-12 cost has tripled in the same time period. Surely education spending could be reverted to 1970 levels with no ill effects, which would represent a 50-70% cut. The average public school
costs $11000 per pupil per year; the vast majority of private schools you'll find of comparable quality to the average public school cost much less than that, most studies concluding roughly half. If public schools charged $11000 for what they were offering they would quickly go out of business in favor of private schools that charged less and offered better quality. Government by its nature offers a one-size-fits-all system, which may fit some areas, but is particularly unsuited to the market of educating millions of individual children with individual minds, experiences, and learning styles.
The free market system, if unleashed in education, will provide education that is far cheaper, of better quality, and that is born by customers and/or voluntary donors. No doubt if a community abolished public schools and compulsory enrollment (so as to not distort the market), the existing private schools would be filled to capacity with middle income students - seeing as people consider education an essential service, demand would be extremely high for new schools, particularly among the lower income students, and entrepreneurs and charitable individuals will see an opportunity and open up new schools. These new schools will follow a multitude of different models, varying more widely than public schools could ever hope to. There will doubtlessly be dozens of models available in the price range of the vast majority, offering better fits for greater numbers of students who were previously subject to the one-size-fits-all model of government schools. There will be a demand from lower income students as well; lower income people will be left with nothing at first, but then they will take a page out of homeschoolers' playbook and pool their resources into educational cooperatives. Charitable, scholarly, and entrepreneurial types will dream up ideas for opening schools for the poor, and then raise funds to help bring down tuitions for their clientele; these will vary almost as widely as the schools at higher ends of the income scale. Financial aid for other types of schools will be factor, opening up even more opportunities for students. Fundraisers would be widely successful and many people would enter the field because we as a society consider education to be essential - the same mentality that works against us changing the government system will work for us in making the free-market system work for everyone. Think this is impossible? A pie-in-the-sky libertarian fantasy filled with unrealistically perfect people? That in reality no one would do it if the state doesn't?
Well, without government who would plow the roads in Yellowstone? If government cut them off an essential service would be gone and the economy would collapse, wouldn't it? Not so. When the Sequester of 2013 cut them off,
the residents launched a fundraising drive to enable the roads to be plowed in the Spring like usual, and the frequent visitors and other individuals chipped in for what they considered an essential service - the residents then proceeded to plow the roads themselves without government funding and visitors could enjoy the road.
Without government who would maintain the parks in Detroit? If government cut them off an essential service would be gone and children's quality of life would suffer, wouldn't it? Even if they could be privatized greedy millionaires would lock out the poor keeping it for themselves, wouldn't they? Not so. 2014
marks four years since one man with a mower, a mind, and some free time created the
Detroit Mower Gang to
have a good time and do good for children in the midst of park funding being cut off by the government. This is another instance of the do-it-yourself approach to essential government services that is not only effective, but is immune to the vagaries of politics. If you still doubt whether this is possible, waltz over to any of your local grocery stores or food banks where you can see people buying, selling, or giving food, a human need even more basic than education, most of whom are using no government funds in doing so.
There is a lot of haggling over welfare and how much of a role government should play in that, but education and health care combined are more costly and more impactful than welfare yet that issue gets much less press.
According to Ballotpedia, in Kansas if Medicaid and K-12 schools were eliminated, which I've already argued would be a great benefit to the state, you've eliminated 44% of the state budget! Spending is reduced from $14.4 billion to $8.1 billion - that more than takes care of the budget shortfall, and instead gives a windfall surplus which can be invested in a sovereign wealth fund, returned to the taxpayers, used to pay debt, or spent elsewhere. If you throw in higher education spending (a different kettle of fish so not covered previously), you've eliminated 61% of the state budget, without touching non-Medicaid welfare, police, firefighters, or transportation.
Police and roads amount to 11% of the Kansas state budget, and adding in K-12 schools it comes to 37%. Since over 90 percent of the budget is covered by revenues, there is no excuse except laziness to properly funding police, roads, and schools, considering that the state has sufficient funds coming in to do so.
The reason sub-Saharan Africa cannot fund such things is because they don't have any money available in the first place - most of Africa has a GDP (PPP) per capita roughly a tenth of the developed world, so they couldn't fund first world essentials no matter what means they used even if they wanted to. Their economies have to grow before that can happen; they suffer from "100% of nothing is nothing" syndrome. It should also be noted that these poor countries
score very low in economic freedom, so they're not suffering from any lack of forcible intervention. The reason a developed country can fund such things is not because of high taxes, but because the money is available to tax and redistribute in the first place; without taxation, the money would still be there available for people to spend on these essentials, which is quite a different situation from what most of Africa faces. Whether this would be a drawback or a benefit is another matter, but my point here is that it is ridiculous to suggest that lack of taxation will put a country into the Third World.
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