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The legislators' assumption was that lowering the tax rate (eventually to zero) would bring business to the state. Ignoring arguments about the validity and app

by rrmm 11y ago

The legislators' assumption was that lowering the tax rate (eventually to zero) would bring business to the state. Ignoring arguments about the validity and applicability of the Laffer curve, what made them think businesses would want to set up shop there when several other states have the same benefit? Businesses have to attract talent, and underfunding services and schools doesn't make for an attractive state. It is painful to watch how easily the people in charge slide into believing that one simple solution will fix everything. Even the best of ideas and intentions end badly when taken to an idealogical extreme.

Artistry121 11y ago
Your last sentence can really be true in a lot of circumstances. The overwhelming note of the article was that even at the end of the day practical concerns did override idealism. Although KS has a long way to go and has some huge disadvantages when compared to other states with no income tax - there is a possibility that a zero income tax policy could help the state.
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Lavery 11y ago
Without going into whether this belief is well founded (personally I don't think it is), its a combination of two factors: an assumption that there is a pool of potential business owners already in the state who are deterred by higher taxes, and a desire to be like Delaware (or internationally, Ireland), where low taxes and favorable regulatory structure are such that many large, inter-state or multinational corporations headquarter themselves there. The first point, as you suggested, is pretty questionable. As you pointed out, it's worth noting that the current wave of entrepreneurship has headquartered itself in California, New York, and Massachusetts, some of the highest tax areas in the country.
- WalterBright 11y ago
  There's a tech boom going on in the Seattle area (Microsoft, Amazon, Google, Adobe, Boeing, etc.), which has no income tax.
  - rrmm 11y ago
    It seems like it's going on there more because it is conducive to talented/idea people being there in a big group rather than about tax structure. Boeing though just built a new facility in another state because of union issues (apparently). Bottom line is that it's a part of the business decision, but not the only part and maybe not even the biggest part.
    - kcmarshall 11y ago
      Boeing has a new assembly site in South Carolina opened in 2011. This is especially ironic (and painful) for Kansas since Boeing had been a major employer in the Wichita area for decades. It sold its Wichita Commercial Airplanes division to Spirit AeroSystems in the mid-2000s.
- rrmm 11y ago
  If they were in a Delaware situation, wouldn't they not get many of the secondary and tertiary benefits of the business? Ie, there would be a shell company there, but not many jobs, and therefore not many people's commerce adding to the state's prosperity? My understanding was that these benefits were what made this sort of thinking work.

by rrmm 11y ago

Artistry121 11y ago

Your last sentence can really be true in a lot of circumstances. The overwhelming note of the article was that even at the end of the day practical concerns did override idealism. Although KS has a long way to go and has some huge disadvantages when compared to other states with no income tax - there is a possibility that a zero income tax policy could help the state.

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Lavery 11y ago

Without going into whether this belief is well founded (personally I don't think it is), its a combination of two factors: an assumption that there is a pool of potential business owners already in the state who are deterred by higher taxes, and a desire to be like Delaware (or internationally, Ireland), where low taxes and favorable regulatory structure are such that many large, inter-state or multinational corporations headquarter themselves there. The first point, as you suggested, is pretty questionable. As you pointed out, it's worth noting that the current wave of entrepreneurship has headquartered itself in California, New York, and Massachusetts, some of the highest tax areas in the country.

WalterBright 11y ago
There's a tech boom going on in the Seattle area (Microsoft, Amazon, Google, Adobe, Boeing, etc.), which has no income tax.
- rrmm 11y ago
  It seems like it's going on there more because it is conducive to talented/idea people being there in a big group rather than about tax structure. Boeing though just built a new facility in another state because of union issues (apparently). Bottom line is that it's a part of the business decision, but not the only part and maybe not even the biggest part.
  - kcmarshall 11y ago
    Boeing has a new assembly site in South Carolina opened in 2011. This is especially ironic (and painful) for Kansas since Boeing had been a major employer in the Wichita area for decades. It sold its Wichita Commercial Airplanes division to Spirit AeroSystems in the mid-2000s.
rrmm 11y ago
If they were in a Delaware situation, wouldn't they not get many of the secondary and tertiary benefits of the business? Ie, there would be a shell company there, but not many jobs, and therefore not many people's commerce adding to the state's prosperity? My understanding was that these benefits were what made this sort of thinking work.