Kansas’s Economic Freedom: Navigating Challenges and Opportunities

Originally published at Kansas Policy Institute. 

​Kansas ranks 14th in the 2024 Economic Freedom of North America (EFNA) report, reflecting an above-average position among U.S. states. To improve, Kansas must address problems in its tax structure and government spending while leveraging its strengths to catch up with leading states like Florida (3rd), Tennessee (4th), and Texas (5).

Neighboring States: How Kansas Stacks Up
​Kansas is surrounded by states with varying degrees of economic freedom, offering both inspiration and a competitive benchmark:

• Oklahoma (11th): Pro-growth policies, lean government, and low taxes.
• Nebraska (13th): Fiscal reforms and competitive taxes drive its strengths.
• Colorado (14th): Above average economic freedom but hampered by rising regulations and tax pressures.
• Missouri (17th): Balanced tax structure and disciplined state spending.

​Compared to these neighbors, Kansas’s ranking is respectable, but it highlights opportunities for improvement, particularly in areas like taxation and government spending.

Taxation: Challenges and Opportunities
Kansas’s tax system remains a weak point, as highlighted by its 25th-place ranking in the Tax Foundation’s 2025 State Business Tax Climate Index.

• Corporate Taxes: While Kansas has improved, burdensome provisions like the throwback rule hurt business competitiveness.
• Individual Income Taxes: Kansas’s top rate of 5.7% is high compared to Oklahoma (4.75%) and Texas, which has no state income tax.
• Property Taxes: Kansas has one of the highest property tax burdens in the region, discouraging investment and homeownership.

To remain competitive, Kansas must simplify its tax structure, reduce income and property tax rates, and eliminate counterproductive provisions like the throwback rule.

Government Spending: Curbing Growth
Excessive government spending continues to weigh on Kansas’s economic freedom. Over the years, state appropriations have outpaced population growth and inflation, creating fiscal strain and driving higher taxes. For example, if Kansas’s spending since 2005 had been limited to these benchmarks, its budget would be $6.7 billion lower today.

To address this, Kansas should implement stricter spending caps and adopt priority-based budgeting to ensure taxpayer dollars are used efficiently. Redirecting savings toward tax reductions would create a more sustainable fiscal environment and reduce the burden on residents and businesses.

Labor Market Regulations: A Mixed Bag
Kansas ranks 23rd in labor market freedom, reflecting strengths in right-to-work policies and relatively low union influence. However, burdensome occupational licensing laws remain a barrier to workforce mobility and entrepreneurship.

Simplifying licensing requirements and expanding reciprocity agreements with other states would attract skilled workers and help Kansas build a more dynamic workforce. This is especially important for low-income residents seeking upward mobility.

How Kansas Can Improve
Kansas has the potential to rise in economic freedom rankings with targeted reforms. Key priorities include:

• Lower Taxes: Simplify the tax code, reduce property and income taxes, and eliminate the throwback rule to make the state more competitive.
• Control Spending: Implement spending caps tied to population growth and inflation and expand priority-based budgeting to reduce waste and ensure fiscal sustainability.
• Reform Licensing Laws: Streamline occupational licensing requirements and increase reciprocity agreements to enhance workforce flexibility and job creation.
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Conclusion
Kansas has made progress in economic freedom, but challenges in taxation and government spending hinder its potential. By learning from its neighbors and addressing inefficiencies, Kansas can strengthen its position and attract more businesses, residents, and investment.
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The path forward is clear: lower taxes, control spending, and reduce barriers to work. By taking these steps, Kansas can lead the region in economic freedom and secure long-term prosperity for its people.