Why Kansas’s Tax-Cut “Failure” Is Really a Success

"The problem with this thinking is that economists characteristically attempt to measure economic growth in monetary terms, which comingles two different concepts. Economic growth actually consists of and is defined by an increase in physical goods and services, not an increase in quantities of money. The quantity of money is controlled only by the central bank, and is thus independent of economic growth. The additional supply of goods and services created by economic growth lowers consumer prices relative to wages, which increases real incomes, but not money incomes. The practice of measuring real, physical production in monetary terms led Kansas economic planners into the error of thinking that increased economic growth would result in higher money incomes and thus higher tax revenue from incomes. They were looking in the wrong place for the benefits from lower taxes."