How Well Does Kansas Compete? A Comparison of the Business Tax Structure of Kansas and Nearby States

Abstract

This study evaluates the degree to which Kansas' s tax structure is competitive in the context of business investment and location decisions. The study compares the tax structure of Kansas with five nearby states: Colorado, Iowa, Missouri, Nebraska, and Oklahoma. The first part of the study, Description of Major Business Taxes in Kansas and Nearby States, reviews state and local revenue, tax rates, tax bases, and economic development incentives for the states in the region. The second part of the study, A State by State Comparison of Business Taxes for Hypothetical Firms in Nine Industries, constructs profiles of representative firms for a number of manufacturing and service industries. The study estimates a tax liability for each firm in each state based on the firm profiles. The study ranks the states according to the taxes which would be paid by each industry. Finally, the third part of the study, A Simulation of Proposed Changes in Kansas Business Taxes, extends the representative firm analysis. The study experiments with changes in tax rates and bases by recalculating the tax liabilities of firms in several industries under alternative tax packages.