News that a Wichita-based company is moving to Colorado sparked a round of Kansas-bashing, most not based on facts.
When a Kansas company announced moving its headquarters to Denver, comments left to a newspaper article made several statements that deserve closer examination.1
One reader wrote “Yup another example that the tax relief for businesses is working in Kansas.” Another wrote “The biggest takeaway here is that then didn’t bother to mention the benefits of lower taxes meaning the tax policy Kansas touts really has no bearing on company decisions.” Another wrote “Just low taxes is not a magnet for business or people wanting to move here.” Let’s look at a few statistics regarding Kansas and Colorado business taxation.
In the 2016 State Business Tax Climate Index from the Tax Foundation, Colorado ranked 18 overall, while Kansas ranked 22.2 According to this measure, Colorado has a better tax environment for business, even after Kansas tax reform.
Data from the U.S. Census Bureau for 2014 shows that Colorado collects $2,195 in taxes from each of its citizens. Kansas collects $2,526.3 That’s after the Kansas tax cuts took effect. Kansas would have to cut taxes much more before it reaches the low level of taxation in Colorado.
The takeaway: Even after Kansas tax reform, Colorado has lower taxes.
Another commenter stated “People want to live and businesses want to be located … where education is important and supported.” The writer didn’t elaborate, but generally when people say “support” education, they mean “spend” a lot on public schools. Another commenter wrote “Public schools are treated as an afterthought by our Governor and Legislature.” So let’s look at spending.
Regarding school spending, the National Education Association collects statistics from a variety of sources and uses some of its own transformations.4 A collection of statistics from that source is nearby. Note that Colorado teacher salaries are higher, while revenue per pupil is lower. Colorado spends more per student when considering current expenditures. Colorado has a higher student-teacher ratio than Kansas.
The U.S. Census Bureau has different figures on spending. In a table titled “Per Pupil Amounts for Current Spending of Public Elementary-Secondary School Systems by State: Fiscal Year 2013” we see Colorado spending $8,647, and Kansas $9,828.5 This tabulation has Kansas spending 13.7 percent more than Colorado.
Looking at scores on the National Assessment of Educational Progress (NAEP) — a test that is the same in all states — we see that when considering all students, Kansas and Colorado scores are very close, when measuring the percent of students scoring proficient or better. White students in Colorado, however, generally score higher than in Kansas.
For NAEP scores by eligibility for free or reduced lunches, we see that Kansas and Colorado are similar, except that Colorado has made progress with eligible students in math, catching up with Kansas. (Eligible students are students from low-income households.)
For what it’s worth, in Colorado 10.4 percent of students who attend public schools attend public charter schools. In Kansas the figure is 0.6 percent, due to Kansas law being specifically designed to limit charter school formation and survival.6
A writer expressed this in his comment: “Colorado also presents a more stable political environment as well.” While this is something that probably can’t be quantified, a recent New York Times article disagrees, quoting a former governor:7
“Colorado is subjected to extremes,” said Roy Romer, a former governor. “It’s not just blue and red. It’s also urban and rural. We have a history to this.”
Of note, Colorado has initiative and referendum. Citizens may, by petition, propose new laws and veto laws the legislature passed.8 Kansas does not have initiative and referendum at the state level. This is one way that Kansas has a more stable political environment than Colorado: Citizens have less political power in Kansas. For example, the law that made marijuana legal in Colorado was passed through citizen initiative. I think it’s safe to say that it will be a long time — if ever — before Kansas has medical marijuana, much less full legalization.
Further, Colorado has TABOR, or Taxpayer Bill of Rights. This is a measure designed to limit the growth of taxation and spending. Whether one likes the idea or not, it has had a tumultuous history in Colorado, according to a Colorado progressive public policy institute.9 And if you thought Kansas was the only state that — purportedly — underfunds education, welcome to Colorado. The same report holds: “As 2016 approached, the [Colorado] General Fund remained nearly $900 million short of what it needed to fully fund K-12 education and well below what it needed to restore postsecondary education and other programs to historic levels.” This is in line with the amount Kansas school spending advocates say Kansas needs to spend, adjusted for population.
Colorado also has term limits on its state legislature and elected members of the state executive department (governor, lieutenant governor, secretary of state, attorney general, and treasurer.)10 Kansas has term limits on its governor, but on no other offices. This argues in favor of Colorado having a more dynamic and less stable government.
- Carrie Rengers. Viega to move corporate headquarters and 113 jobs to Denver. Wichita Eagle, March 18, 2016. Available at: http://www.kansas.com/news/business/biz-columns-blogs/carrie-rengers/article66851717.html. ↩
- 2016 State Business Tax Climate Index. (2016). Tax Foundation. Available at: http://taxfoundation.org/article/2016-state-business-tax-climate-index. ↩
- State Government Tax Collections – Business & Industry. US Census Bureau. Available at: http://www.census.gov/govs/statetax/. ↩
- Rankings of the States 2014 and Estimates of School Statistics 2015, National Education Association Research, March 2015. Available at http://www.nea.org/assets/docs/NEA_Rankings_And_Estimates-2015-03-11a.pdf. ↩
- U.S. Census Bureau. (2016). Public Elementary–Secondary Education Finance Data. Census.gov. Available at: https://www.census.gov/govs/school/. ↩
- National Center for Education Statistics. Public elementary and secondary charter schools and enrollment, by state: Selected years, 1999-2000 through 2012-13. Available at http://nces.ed.gov/programs/digest/d14/tables/dt14_216.90.asp. ↩
- Healy, J. (2014). Tracing the Line in Colorado, a State Split Left and Right. Nytimes.com. Available at: http://www.nytimes.com/2014/10/24/us/politics/in-colorado-ever-in-transition-a-fight-for-power.html. ↩
- Laws governing the initiative process in Colorado – Ballotpedia. (2016). Ballotpedia.org. Available at: https://ballotpedia.org/Laws_governing_the_initiative_process_in_Colorado. ↩
- Bell Policy Center. The road to 2016: More than three decades of constitutional amendments, legislative acts and economic ups and downs. Available at http://www.bellpolicy.org/research/road-2016. ↩
- Term Limits in Colorado, Colorado.gov. Available at https://www.colorado.gov/pacific/sites/default/files/Term%20Limits%20in%20Colorado.pdf. ↩
Shazam. Who would have thunk it? Colorado has lower business and income taxes than we do. Sounds like we have some more tax cutting to do. Also, for those of you who have long lamented the fact that we in Kansas do not have voter initiative and referendum, here’s a fun fact that the article failed to mention. Within an election cycle or two of the citizens voting in the TABOR, another voter initiative was passed which mandated that school funding had to increase beyond the level of annual inflation by a prescribed amount each year. As a result, the State was required to increase education spending but could not raise taxes to do it. Another thing I’m am daily thankful for. Kansas does not have initiative and referendum.
I would like to vote on property tax hikes like they do in our neighboring states of Missouri, Oklahoma, and Colorado. Since the voters decide these decisions their property taxes are lower than Kansas. This is a significant eco-devo advantage by reducing tax uncertainty.