|This report focuses on the structure of state and local business taxes, tax incentives, and operational costs, generally from the point of view of the effects on economic development, and especially on the location of mobile or “footloose” corporations. The study compares Kansas with five nearby states, examining effects on ten types of firms (new versus mature firms in five industries). The report includes, chapters giving overviews on business taxation and on locational decisions of businesses, separate chapters analyzing each major tax (personal and corporate income tax, property tax, sales tax, unemployment and workers compensation taxes), analyzing tax rates and summarizing related tax incentives by state, a chapter on other business costs (land, construction, labor, energy)., and a chapter comparing total business cost for the ten types of business for the six states.The present study, like the 2001 study, found that total measured costs in Kansas are average to below average for the region, for every industry examined, for mature firms as well as newly established firms. Tax costs taken alone are also are near the regional average. As a typical example, for new firms in high-capital-intensity manufacturing, modeled profits of a firm locating in Kansas would yield profits about five percent above the regional average of its surrounding states. Colorado is highest in cost (yielding profits 18 percent below the same regional average) and Oklahoma is lowest in cost (with profits 10 percent above the average). Given that this is a relatively low-cost region, Kansas is also cost-competitive in the US as a whole. Two other finding are worthy of note. First, cost variations within states can equal or exceed variations between states. Therefore differences in state-wide averages do not tell the whole story. Second, labor costs are much more important than tax costs, with respect both to average levels and variations across states. Therefore low-cost strategies would need to focus more on labor costs than tax costs.