Kansas or California?
As Donald Trump turns to domestic tax reform, he should learn from progressive states like California, where the earned income tax credit and the minimum wage have reduced poverty and inequality, and stimulated demand. These states, unlike the supply-side embarrassment that Kansas has become, are clearly doing something right.
BERKELEY – US President Donald Trump and congressional Republicans have made large tax cuts for top earners a high priority, arguing that such cuts will stimulate economic growth, create jobs, and pay for themselves through increased revenues.
But these claims are baseless. Countless international, national, and state comparisons have demonstrated overwhelmingly that trickle-down economics is a regressive fantasy. The latest evidence of this comes from Kansas, where tax cuts signed by Governor Sam Brownback in 2012 have utterly failed to deliver growth.
Before making the same costly mistake, Trump should take a lesson from California – a progressive state that he loves to hate. California raised taxes for top earners in 2012 and has since enjoyed one of the strongest growth rates in the country. And now, California is significantly expanding its earned income tax credit, CalEITC, building on the proven record of the federal earned income tax credit (EITC).
We hope you're enjoying Project Syndicate.
To continue reading, subscribe now.
Get unlimited access to PS premium content, including in-depth commentaries, book reviews, exclusive interviews, On Point, the Big Picture, the PS Archive, and our annual year-ahead magazine.
Already have an account or want to create one? Log in