New projections show more aggressive tax cut plan creates more jobs

TOPEKA — A new set of projections released to House Republicans this afternoon show that the aggressive and deficit-inducing tax cut bill on Gov. Sam Brownback’s desk would create more jobs than a less-aggressive plan negotiated by House and Senate Republicans.

The new numbers came as House Republicans debated a procedural vote that would pave the way for the House to vote on the alternative tax plan, which reduces individual income tax rates and phases out nonwage income taxes for about 191,000 limited liability companies, subchapter S corporations and sole proprietorships.

Figures produced by the Department of Revenue using computer software that projects jobs gained in relation to tax cuts show the more aggressive cuts would produce almost 23,000 new jobs on top of natural growth. The negotiated plan, which Brownback has said he’d prefer, would generate  just over 21,000 jobs beyond natural growth. The projections do not show what assumptions were included in the calculation.

Some conservative Republicans are pushing to kill the negotiated plan so that Brownback will sign into law the more aggressive plan, which is projected by legislative researchers to cause a budget deficit in 2018 of more than $2 billion.

"Republicans know when you cut taxes dramatically that you’re actually going to increase tax revenues," said Overland Park Republican Rep. Charlotte O’Hara.

Brownback administration officials are urging conservatives to approve the negotiated plan because it would put less strain on the budget and allow the state to more aggressively pay down debt.

Budget Director Steve Anderson urged the House to approve the negotiated plan while also saying that Brownback will sign the more aggressive bill into law if the negotiated proposal isn’t approved.

He said having the two bills is like a Miss America contest. "We've got two beautiful options here,” he said.

But moderate Republicans, Democrats and some tax policy experts say the software used to generate the job creation numbers can be easily manipulated. They don’t believe that cutting income taxes will lead to meaningful job growth and say that slashing one of the state’s top revenue sources could lead to massive cuts to state services after years of cutting back because of the recession.

Nick Johnson, vice president for state fiscal policy at the Center on Budget and Policy Priorities in Washington D.C., said there’s no solid evidence that tax cuts lead to strong job growth. And he said that the dynamic scoring methods being used by the Brownback administration don’t take into account the negative impacts of deep cuts to state services.

"What's on the table there is really unproven and very dramatic,” he said. “It's as likely to do more harm than good to the state."