ARTICLE CRITIQUE 3
Thisarticle discusses the effect of tax cut which was supposed to reducestate tax revenue in Kansas but instead a substantial revenuereduction was realized. The state had budgeted for $651 million inrevenue but instead, it received $369 million form personal incometax.
Kansasabolished tax not only on a variety of income but also on“small-businessincome.” It has been noted that many businesses have changed theirincorporation structure so as to suit the tax law. By doing this,business owners take all income as profits by setting their salariesto zero consequently avoiding Kansas tax.
Thetax break was meant to benefit small business but it can be arguedthat many of the beneficiaries are sole proprietors who are notlikely to hire anybody thus nullifying the concept of job creationfor the state. Additionally, it can be noted that small businesses donot necessarily drive job growth for the nation.
Itcan also be noted that taxpayers do not even benefit from part of therevenue loss that results from the tax cut. In addition to that, thestate budget is affected. Even though Kansas lawmakers new the budgetwould suffer, the concern is how they will use the shrinking revenue.
Thoughit is argued that providing incentives such as tax cuts to businesswill enable the economy to grow rapidly, tax cuts should be providein a sustainable manner so that revenue projections and budgetaryallocations do not suffer. Tax is a very important element inbusiness activity and it should therefore be examined accordingly.
Inconclusion, reasonable tax cut is an important stimulus to theeconomy but it should not be given out to some unsustainable levels.Such tax cuts end up affecting the economy by reducing the taxrevenue.
Bivens,Josh. (2011). Method Memo on Estimating the Jobs Impact of VariousPolicy Changes.
JoshBarro. (2014).Yes, if You Cut Taxes, You Get Less Tax Revenue.