Tax Cuts Aren’t Delivering Job Growth, in Wisconsin or Elsewhere
Wisconsin isn’t the only state that has made deep tax cuts on the premise of boosting the economy, only to find out that the promised job growth has not materialized. Kansas and North Carolina also passed large tax cuts and have experienced disappointing job growth. As a result of the tax cuts, these states have fewer resources to support investments in public schools, higher education, and a healthy workforce – investments that have a proven track record for creating jobs.
In Wisconsin, lawmakers have passed a series of tax cuts that total nearly $2 billion over four years. Governor Walker and some legislators have said that these tax cuts will make Wisconsin a more attractive place to do business, but job growth in Wisconsin since the tax cuts took effect has been slower than the national average. Unlike the U.S., Wisconsin has not yet gained enough jobs to replace the ones wiped out by the recession. Wisconsin’s Gross Domestic Product (GDP) has grown slower than the U.S. average since the tax cuts went into effect, and slower than most other states in the upper Midwest.
Deep tax cuts in Kansas haven’t boosted the economy there, either. This year, tax cuts cost the state about 8% of the revenue it uses to fund schools, health care, and other public services. In recent weeks Kansas announced that tax revenue dropped so low that the state would have to dip into its reserve fund to balance the books.
The tax cuts didn’t translate to job growth, according to the Center on Budget and Policy Priorities:
Since the tax cuts took effect at the beginning of 2013, Kansas has added jobs at a pace modestly slower than the country as a whole. The earnings and incomes of Kansans have performed slightly worse than the U.S. as a whole as well. (An exception is farmers, whose incomes improved as the state recovered from a drought.) And so far there’s no evidence that Kansas is enjoying exceptional business growth: the number of registered business grew more slowly last year than in 2012, and the state’s share of all U.S. business establishments fell over the first three quarters of last year, the latest data available.
Meanwhile, the tax cuts in Kansas have resulted in less support for schools, libraries, local health departments, families living in poverty, and the state’s judicial system. And a bond rating agency has downgraded its rating of Kansas’ creditworthiness, citing revenue reductions from tax cuts and slow economic growth, among other factors. The downgrade could make it more expensive for Kansas to borrow money for large building projects, such as roads.
In North Carolina, lawmakers passed a measure that will reduce state revenue by about $650 million a year, starting in budget year 2016. The legislation will give enormous tax breaks to taxpayers with the highest incomes, but will actually increase taxes for many taxpayers who are not as wealthy.
Job growth in North Carolina has also failed to take off, according to the Fiscal Times:
North Carolina, at least, matched the national average in job creation in 2013. But the total number of jobs added to the state’s economy in the second half of the year – when the tax cuts went into effect, was actually smaller than the total number added in 2012.
The tax cuts in Wisconsin, Kansas, and North Carolina have not done much to create jobs. Instead, the tax cuts have made it harder to build strong economies in those states, by reducing the revenue available to invest in schools, transportation, safe communities, and other tried-and-true building blocks of economic growth.