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Tax Cuts Come Back To Bite State Tax?

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In 2012, the legislature of the state of Kansas passed a bill that “allows about 300,000 independent business owners to pay no state tax on the bulk, if not all, of their income”(MONTGOMERY). This bill was created in order to put more money into the hands of businesses, and to create jobs. In fact, Kansas Governor Sam Brownback (R) said in an interview that this tax cut for Limited Liability Companies would be like a “shot of adrenaline into the heart of the Kansas economy”(“Big Tax Cuts Come Back to Bite State Governments”). Unfortunately, once the tax cuts passed, high income individuals in Kansas created Limited Liability Companies in their name, with themselves as the singular employee. Because of this, those individuals were no longer …show more content…

As a result, “revenue from the state's individual income tax plunged by more than $700 million, a 25% drop”(“Failed Kansas Tax Experiment Holds Lessons for Washington”). Furthermore, there is little to no evidence that the Supposed “Shot of adrenaline” created many jobs in even the businesses that were making use of the policy in an honest way. In fact, according to Jordan Weissmann, a writer for Slate, “a group of economists took stock of the Kansas misadventure, using administrative tax data to figure out whether the cuts had done any good at all. In short, the researchers concluded, they had not”(Weissmann). This is alarming as if the bill did not make progress in decreasing unemployment, then the lost revenue for the state of Kansas must have caused issues in other aspects. Illustrating this point, Jordan Weismann alleges that because the State cut taxes on LLCs, it was required to “cut spending on public schools, colleges, Medicaid, and more”(Weissmann). However, there is still opposition to these ideas among wealthy Americans, Congressmen, and voters. Several arguments are used in opposition to some of the policies that have been suggested in this paper, and in the next few paragraphs, those viewpoints will be refuted. The first of these opposing viewpoints is that because

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