Business Taxes in Kansas and Nearby States: Volume 1 -- Overview of State and Local Taxation in the Region

Abstract

Business taxation continues to be a major concern of legislators, policy makers, and other commun­ity leaders. Kansas must offer a sufficiently attractive business climate in order to maintain jobs, income, and a high standard of living in the 1990s. The business climate in a state depends on the productivity of its labor, its proximity to major markets, the strength of its educational system, the quality of life in its communities, and a multitude of factors in addition to taxation. But taxes remain a focus of attention because, unlike quality of life factors, they fall under the direct control of state decision makers.

Kansas Inc. has recently funded a two-part study of business taxation and business costs in Kansas and five nearby states: Colorado, Iowa, Missouri, Nebraska, and Oklahoma. The first part of the study, presented in Volume 1 of the Final Report, describes state and local taxation in the region. The report presents a historical overview, and then turns to a detailed comparison of specific taxes on income, prop­erty, sales, and labor. The study considers the basic tax rate structures of the states and identifies the numerous tax incentives available to new and expanding businesses.

The second part of the study, presented in Volume 2 of the Final Report, takes a quantitative approach to interstate tax comparisons. The Institute for Public Policy and Business Research developed a tax and cost simulation model to analyze the impact of business taxes on typical firms in each of several important industries. The estimates of taxes and costs provided by the simulation model provide insights into whether taxes place Kansas at a competitive disadvantage.