In light of the national and international competition that is so prevalent in the 21st century marketplace, the Kansas economy has been average or below average for too long. This is reflected by private sector job losses, people moving out of the state, and a relative lack of capital flow into Kansas.

While there are certainly some factors a state cannot control when it comes to its economy, tax policy is one area a state controls completely. And when it comes to Kansas’ tax policy, the state does not rank as high as it must compared to other states in order to be as competitive as possible in attracting new businesses and generating economic and private sector job growth.

Numbers help tell the story:

Private Sector Job Losses (Kansas Department of Labor)

• Private sector employment in Kansas fell by 39,700 jobs from 2001 to 2010.

Outmigration of Kansas Residents (Kansas Department of Labor and Rich States, Poor States)

• From 2004 through 2010, there was net outmigration of 15,683 tax filers from Kansas with 17,640 dependents and a total adjusted gross income of $1.09 billion.
• Texas gained the most from Kansas outmigration with 6,395 tax filers from Kansas moving to Texas along with 12,837 dependents and a total adjusted gross income of $305.4 million.
• Only 10 states out of 50 had worse outmigration than Kansas from 2000 to 2009.

Kansas Tax Rankings Compared to Other States (Tax Foundation and Rich States, Poor States)

• State Business Tax Climate Index 2011: Kansas ranks 35th
• State Corporate Tax Index 2011: Kansas ranks 35th
• State Sales Tax Index 2011: Kansas ranks 32nd
• The top marginal personal income tax rate is 6.45 percent, which ranks 26th in the nation.
• The top marginal corporate income tax rate is 7 percent, which ranks 25th in the nation.
• The property tax burden ranks 33rd in the nation.
• The sales tax burden ranks 35th in the nation.
• Debt service as a share of tax revenue is 8.4 percent, which ranks 30th in the nation.

Capital Flow (Federal Reserve Bank of Kansas City)

• In 2010, Nebraska was the regional winner in the ranking of states when comparing state gross domestic product to personal income ratio, which reflects net capital inflow relative to other states. Nebraska ranked 10th in the nation; Kansas ranked 32nd.

Brownback Road Map for Kansas Metrics

• In 2010, the average net personal income in Kansas was $39,005.[1]
• In January 2011, private sector employment was 1,035,200.[2]
• In 2010, the percentage of Kansas’ children living in poverty was 18.4 percent.[3]
• In January 2011, the unemployment rate in Kansas was 7.4 percent.[4]

According to Kail Padgitt of the Tax Foundation, “Good state tax systems levy low, flat rates on the broadest bases possible, and they treat all taxpayers the same. Variation in the tax treatment of different industries favors one economic activity or decision over another. The more riddled a tax system is with politically motivated preferences the less likely it is that business decisions will be made in response to market forces.”

With that understanding, we seek to change the dynamic that has led to average (or worse) economic results — so more Kansas families can achieve a meaningful increase in income and opportunity.

By making Kansas tax policy fairer, flatter and simpler, and by creating a pro-growth business environment that encourages financial investment in Kansas, the state can position itself as a top economic performer. This will reduce poverty and create economic opportunities for the maximum number of Kansans.

Conversely, the status quo could perpetuate the troubling trends that challenged the Kansas economy over the “lost decade.” Inaction is not a responsible or compassionate option.