Why Kansas's Tax Cuts are not Working

Thanks to the St Louis Post Dispatch for tracking this example down.

The Basketball Coach of the University of Kansas is paid $230,000 for coaching.  He pays both Federal and State Income tax on whatever taxable income is left after deductions.  He is also paid $2.75 million under a personal services contract which he has funneled into an LLC.  Under Kansas tax cut law, income in an LLC is not taxed by the state under the theory that LLC's create jobs.  But the only employee of the LLC is the U of K Basketball Coach, who probably consolidates the LLC into his personal return for Federal Tax purposes.

So Kansas gets no tax revenue from the personal services contract and no incremental jobs have been created.

And the myth of trickle down economics working at reasonable tax rates is shown once again to be a myth.