Kansas Can’t Afford Another Corporate Handout

Originally published at Kansas Policy Institute.

​Kansas lawmakers are considering House Bill 2308 (HB 2308), which would create the Aviation and Innovative Manufacturing in Kansas (AIM-K) Act, a massive corporate welfare scheme. Supporters claim it will generate $21.38 in economic benefits for every $1 spent by the state over a decade, but that claim ignores economic reality. Government handouts don’t create new wealth—they redistribute taxpayer dollars, distorting the market and making it harder for businesses that don’t get special treatment.

HB 2308 would shower select industries—especially aerospace, electric vehicles, and hydrogen production—with tax breaks and subsidies, including:

Keeping 100% of payroll withholding taxes for 10 years, instead of contributing to state revenue.
There are 10% refundable capital investment tax credits, which means companies can get money back even if they pay little or no taxes.
Up to $5 million in workforce training subsidies, shifting costs from employers to taxpayers.
Sales tax exemptions on construction materials, reducing state tax collections.
A $1 million bonus for companies spending $20 million annually on Kansas suppliers.
While marketed as “economic development,” AIM-K picks winners and losers in the economy, benefiting politically favored corporations while leaving small businesses and workers to cover the costs.

The study backing AIM-K claims it will improve the economy with state spending on incentives with taxpayer money. That sounds great—until you realize it’s based on faulty assumptions.

Government spending doesn’t magically create economic growth. Every dollar the state gives away in incentives is taken from taxpayers or businesses that don’t get the deal. The study ignores opportunity costs—what that money could have done if left to businesses and consumers making free-market decisions.

Kansas has seen these inflated claims before. The Attracting Powerful Economic Expansion (APEX) program, passed in 2022, handed out massive tax incentives to a company that failed to meet job and investment expectations. These programs almost always overpromise and underdeliver.

Kansas already has a high tax burden, yet lawmakers continue to offer tax breaks to big corporations while small businesses and working families pay the bill.

Payroll tax retention means AIM-K companies keep employee tax payments instead of contributing to public services. This forces other businesses and individuals to pay more or endure service cuts. Meanwhile, companies not lucky enough to qualify for these incentives still have to pay full freight, making it harder for them to compete.

When governments interfere with the economy by picking winners and losers, they discourage organic business growth. True prosperity comes from a fair, competitive market where all businesses—not just the politically connected—can thrive.

Instead of funneling tax dollars into corporate welfare, Kansas should focus on policies that benefit all businesses and workers:

Lower taxes for everyone, not just a few companies. Cutting income taxes across the board encourages broad investment and job creation.
Reduce regulations that make it harder to do business, creating an environment where companies want to come to Kansas without needing incentives.
Control government spending by capping budget growth at population growth plus inflation, ensuring taxpayers aren’t funding unnecessary programs.
States like Florida have shown that low taxes and limited government support real economic growth. Kansas should move in that direction instead of relying on corporate handouts that rarely pay off.

KPI has repeatedly published on the failures of taxpayer-funded subsidies for businesses. These include the more than $1 billion to Panasonic, hundreds of millions to Integra, or when individual taxpayers paid more so that some favored industry got a break.  

HB 2308 is another example of failed economic planning. The $21 return-on-investment claim is bogus—ignoring how taking money from taxpayers reduces economic activity elsewhere. History has shown that these programs don’t work—businesses take the incentives, stay for a while, and then leave once the subsidies run out.

Instead of propping up politically favored industries, Kansas should focus on lower taxes, responsible spending, and a level playing field for all businesses. That’s how to support real, lasting prosperity.