Policy Documents

Research & Commentary: Kansas Income Tax Elimination

Elizabeth Henderson –
September 6, 2011

State of Kansas Budget Director Steve Anderson has expressed hope the state legislature will approve a bill to eliminate the state’s personal income tax over time. The proposal would raise sales and property taxes and cap overall state revenue at the 2010 level, while reducing corporate taxes from 4 or 7 percent to 3.5 percent.

These reforms would follow the lead of the nine states that already have no personal income tax. According to the fourth edition of Rich States, Poor States, issued by the American Legislative Exchange Council, those nine states “have, on average, seen gross state product increase by 61.23 percent, job growth increase by 7.78 percent, and population increase by 13.75 percent” in the past decade.

The nine states with the nation’s highest personal income taxes averaged only 44.91 percent increases in gross state product, a 0.47 percent increase in job growth, and a 6.48 percent increase in population during that time frame. Rich States, Poor States notes the gross state product of each of the 11 states that adopted an income tax in the past 50 years has since “declined as a share of total U.S. output.”

Opponents of Anderson’s income tax-elimination proposal contend high taxes don’t drive businesses out of the state, citing school quality and government services as other major factors in corporate relocation. However, lower corporate taxes mean businesses can sell their products at more competitive prices. Neighboring Missouri’s recent repeal of its anti-business franchise tax should provide further incentive for tax reforms to make Kansas more competitive and avoid corporate “border bleed.” Eliminating its state income tax would make Kansas more competitive in attracting jobs and businesses to the state.

The following documents provide additional information on the Kansas initiative and the burden of personal and corporate income taxes.


Kansas Budget Director Calls for End of State Income Tax
Budget & Tax News interviews Kansas Budget Director Steve Anderson about his plans to revive income tax reforms in the state.

Rich States, Poor States (4th Edition)
The fourth edition of this publication from the American Legislative Exchange Council and authors Laffer, Moore, and Williams offers both individual state and comparative accounts of the negative effects of income taxes.

Ten Principles of State Fiscal Policy

This booklet from The Heartland Institute provides policymakers and civic and business leaders with a highly condensed, easy-to-read guide to state fiscal policy principles. The principles range from “Above all else: Keep taxes low” to “Protect state employees from politics.”

What Do Corporate Income Taxes Cost American Families?
The Tax Foundation documents the monetary burden the corporate tax puts on American families in the form of higher prices, lower wages, and lower returns on investments.

Missouri Lawmakers Debate Eliminating Personal Income Tax

A 2010 Budget & Tax News article reports on Missouri’s debate over eliminating its state income tax.

Corporate Income Tax Rates in the U.S. Are Among the Highest in the World
This 2008 article from Budget & Tax News describes the advantages of low corporate income taxes in the global marketplace and documents the unusually high rates imposed in the United States.

Taxing the Rich Will Bankrupt Your State

John Nothdurft, government relations director of The Heartland Institute, explains the negative effects of “millionaire” taxes and excessive taxation of the top income brackets.

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit the Budget & Tax News Web site at http://news.heartland.org/fiscal, The Heartland Institute’s Web site at www.heartland.org, or PolicyBot, Heartland’s free online research database, at www.policybot.org.

If you have any questions about this issue or the Heartland Web site, contact Government Relations Director John Nothdurft at 312/377-4000 or jnothdurft@heartland.org.