In 2012, voters in California approved a measure to raise taxes on millionaires, bringing their top state income tax rate to 13.3 percent, the highest in the nation. Conservative economists predicted calamity, or at least a big slowdown in growth. Also that year, the governor of Kansas signed a series of changes to the state’s tax code, including reducing income and sales tax rates. Conservative economists predicted a boom.
Neither of those predictions came true. Not right away — California grew just fine in the year the tax hikes took effect — and especially not in the medium term, as new economic data showed this week.
Now, correlation does not, as they say, equal causation, and two examples are but a small sample. But the divergent experiences of California and Kansas run counter to a popular view, particularly among conservative economists, that tax cuts tend to supercharge growth and tax increases chill it.
California’s economy grew by 4.1 percent in 2015, according to new numbers from the Bureau of Economic Analysis, tying it with Oregon for the fastest state growth of the year. That was up from 3.1 percent growth for the Golden State in 2014, which was near the top of the national pack.
The Kansas economy, on the other hand, grew 0.2 percent in 2015. That’s down from 1.2 percent in 2014, and below neighboring states such as Nebraska (2.1 percent) and Missouri (1.2 percent). Kansas ended the year with two consecutive quarters of negative growth — a shrinking economy. By a common definition of the term, the state entered 2016 in recession.
To see the political evolution of Charles and David Koch, start in 1996. President Bill Clinton was fighting Bob Dole to stay in the White House, and Republicans were struggling to keep control of the House of Representatives after winning a majority there for the first time in 42 years.
The election would mark the first Republican victory linked publicly to Koch money and established the brothers’ pattern of influencing elections through tax-exempt groups.
The Kansas brothers kept a low profile in the months leading up to the 1996 election. Koch Industries gave $320,800 to congressional candidates that year — about a fifth of the $1.6 million the company would later give in 2012, according to the Center for Responsive Politics.
Yet Senate campaign finance investigators suspected the brothers funneled millions of dollars in the final months through secretive groups to run attack ads that helped Republicans win seats in Congress. The massive ad campaigns likely changed the outcome of close congressional races, investigators said, including four races in the Kochs’ home state of Kansas.
Read more at Investigative Reporting Workshop