In this episode of WichitaLiberty.TV: Bob Weeks and Karl Peterjohn discuss health care in Kansas and taxes in Sedgwick County. View below, or click here to view at YouTube. Episode 146, broadcast April 9, 2017.
Expanding Medicaid in Kansas. Expanding Medicaid in Kansas would be costly, undoubtedly more costly than estimated, has an uncertain future, and doesn’t provide very good results for those it covers.
An interactive visualization of tax collections by state governments.
Note: this visualization has been updated. Click here for the most recent version.
Each year the United States Census Bureau collects data from the states regarding tax collections in various categories. I present this data in an interactive visualization.
The values are for tax collections by the state only, not local governmental entities like cities, counties, townships, improvement districts, cemetery districts, library districts, drainage districts, watershed districts, and school districts.
Of particular interest is the “State Total” tab. Here you can select a number of states and compare their tax burdens. (Probably three or four states at a time is the practical limit.) This data is presented on a per-person basis.
The example shown below compares Kansas and Colorado. Many might be surprised to know that tax collections in Kansas are higher than in Colorado, on a per-person basis.
Is there a relationship between marginal tax rates and tax dollars collected?
The top marginal tax rate — that’s the rate that applies to high income earners on most of their income — was above 90 percent during most of the 1950s. From 2003 to 2012 it was 35 percent, and is now 39.6 percent. Some see that as a lost opportunity. If we could return to the tax rates of the 1950s, they say, we could generate much more revenue for government.
The top marginal tax rate is the rate that applies to income. It’s not the same as what is actually paid. This fact is unknown or ignored by those who clamor for higher taxes on the rich.
Top marginal tax rates and tax paid. Click for larger.A nearby charts illustrates the lack of relationship between the top marginal income tax rate and the income taxes actually paid. (Click chart for larger version.)
The top marginal tax rate has varied widely. But since World War II, the taxes actually collected, expressed as a percentage of gross domestic product, has been fairly constant. In 1952 the top tax rate was 92.0 percent, and income taxes paid as a percent of GDP was 18.5 percent. In 2007, for example, the top rate was 35.0 percent, and income taxes paid as a percent of GDP was 17.9 percent.
Try as we might, raising tax rates won’t generate higher revenues (as a percentage of gross domestic product), due to Hauser’s law.
W. Kurt Hauser explains in The Wall Street Journal: “Even amoebas learn by trial and error, but some economists and politicians do not. The Obama administration’s budget projections claim that raising taxes on the top 2% of taxpayers, those individuals earning more than $200,000 and couples earning $250,000 or more, will increase revenues to the U.S. Treasury. The empirical evidence suggests otherwise. None of the personal income tax or capital gains tax increases enacted in the post-World War II period has raised the projected tax revenues. Over the past six decades, tax revenues as a percentage of GDP have averaged just under 19% regardless of the top marginal personal income tax rate. The top marginal rate has been as high as 92% (1952-53) and as low as 28% (1988-90). This observation was first reported in an op-ed I wrote for this newspaper in March 1993. A wit later dubbed this ‘Hauser’s Law.’”
For many people, there is a direct relationship between tax rates and the amount of tax paid. For workers who earn a paycheck, there’s not much they can do to change the timing of their income, find tax shelters, or shift income to capital gains. When income tax rates rise, they have to pay more.
But people with high incomes can use these and other strategies to reduce the taxes they pay. In fact, there is an entire industry of accountants and lawyers to help people reduce their tax. Often — particularly in the past when top marginal rates were very high — investments and transactions were made solely for the purpose of avoiding taxes, not for productive economic benefit.
People react to changes in tax law. As tax rates rise, people seek to reduce their taxable income, and make investments in unproductive tax shelters. There is less incentive to work and invest. These are some of the reasons why tax hikes usually don’t generate the promised revenue.
But: High tax rates make the middle class feel better about paying their own taxes. With top tax rates of 90 percent, they may believe that the rich are paying a lot of tax. The middle class may take comfort in the fact that someone else is worse off. But that is based on the misconception that high tax rates mean rich people actually pay correspondingly higher tax.
Here’s a table of the three votes taken in the Kansas House of Representatives in February and April on HB 2044, titled “Establishing the KanCare bridge to a healthy Kansas program and providing medicaid reimbursement for clubhouse rehabilitation services.” Medicaid expansion, in other words. This expansion is a key part of Obamacare, but not all states have not adopted the plan.
Vote 3 on April 3 was to override the governor’s veto. 84 votes are required for a successful override.
If you’re interested in contacting your legislators on this issue, click on House Roster and Senate Roster.
A public opinion poll asks whether Kansans are concerned about school spending, but leaves us wondering why they are concerned.
A public opinion poll commissioned by Kansas Center for Economic Growth asks questions so vague that the results could be interpreted in many ways.
The March 30, 2017 press release on the poll announced: “Nearly all Kansas voters are worried the state is not investing enough public education. Eighty-five percent of Kansas voters feel concerned about the state’s level of spending on public education.”1
“Q.5 Would you say you are very concerned, somewhat concerned, a little concerned, or not at all concerned about the state’s level of spending on public education?”
(The reported results are: Very concerned 63%, Somewhat concerned 20%, A little concerned 5%, Not at all concerned 8%, (Don’t know/refused) 3%)
Let me ask you: Are you concerned about the level of spending on public education? I am. And there might be many reasons why Kansans are concerned.
Some people think the state spends too much
Some people think the state spends too little
Many people know that school spending is a large portion of the state’s budget, so naturally they are concerned, no matter if their opinion is that spending is too high or too low
Some people are concerned that state spending is misdirected and inefficient
There could be other reasons why people are concerned about the level of state spending on education. But this question does not give any guidance as to why people are concerned.
Later in the survey another question was asked: “Q.12 As you may know, the Kansas Supreme Court recently ruled, unanimously, that the state’s spending on public education was unconstitutionally low and needed to be fixed by June 30th. With this in mind, would you say you are very concerned, somewhat concerned, a little concerned, or not at all concerned about the state’s level of spending on public education?”
Still, the question did not ask whether people are concerned because spending is too high or too low. As a result, the answers to the survey questions can be used to advance nearly any agenda.
In this episode of WichitaLiberty.TV. Fred L. Smith, Jr. is the founder of the Competitive Enterprise Institute. He explains the problems with excessive regulation and a large administrative state. Episode 145, broadcast April 2, 2017. View below, or click here to view at YouTube.
An index of past economic activity for each state, and another index looking forward. Presented in an interactive visualization.
The Federal Reserve Bank of Philadelphia calculates two indexes that track and forecast economic activity in the states and the country as a whole.
The coincident index is a measure of current and past economic activity for each state.1 This index includes four indicators: nonfarm payroll employment, the unemployment rate, average hours worked in manufacturing, and wages and salaries (adjusted for inflation). July 1992 is given the value 100.
The leading index anticipates the six-month growth rate of the state’s coincident index.2 In addition to the coincident index, “the models include other variables that lead the economy: state-level housing permits (1 to 4 units), state initial unemployment insurance claims, delivery times from the Institute for Supply Management (ISM) manufacturing survey, and the interest rate spread between the 10-year Treasury bond and the 3-month Treasury bill.”
Positive values mean the coincident index is expected to rise in the future six months, while negative values mean it is expected to fall.
I’ve created an interactive visualization of these two indexes. An example appears nearby. Click here to use the visualization. You may select a range of dates and one or more states to include on the chart. Click on a state’s legend color to spotlight it against other states.
Jeff Glendening is Kansas State Director for Americans for Prosperity. He spoke on the topic “It’s Time to Wake Up!” Recorded at the Wichita Pachyderm Club, March 24, 2017.
In this episode of WichitaLiberty.TV: Ben Jones of Equal Justice USA and Conservatives Concerned about the Death Penalty explains issues surrounding the death penalty. View below, or click here to view at YouTube. Episode 144, broadcast March 26, 2017.
Here’s a table of the three votes taken in the Kansas House of Representatives in February and April on 
Jeff Glendening is Kansas State Director for Americans for Prosperity. He spoke on the topic “It’s Time to Wake Up!” Recorded at the 