New IRS domestic migration data for the State of Kansas demonstrates something the late Milton Friedman said: “If you ever want to know what people prefer, the surest sign is how they vote with their feet.”
Kansas had a net loss of $361 million in adjusted gross income in 2023 from U.S. residents moving in and out of the state, and the loss over the last 30 years is almost $8 billion. To Friedman’s point, Kansas had significant net gains in 2023 from high-tax states such as California, Illinois, and Nebraska, while suffering net losses to low-tax states such as Texas, Florida, and Arizona. The Sunflower State’s largest net loss of $146 million was to Missouri, which is ranked the 12th-most competitive on state taxes by the Tax Foundation, whereas Kansas is ranked #23.
The IRS county-level data also shows people voting with their feet.
“Johnson County elected officials routinely brag that the county is the economic engine of the state, but it lost $125 million in AGI in 2023 due to domestic migration,” Kansas Policy Institute CEO Dave Trabert wrote in a recent editorial. “That’s the fourth consecutive year that Johnson County recorded a net loss, and the net loss over the last five years is $572 million.”
The Sentinel is a subsidiary of KPI.
According to the IRS, Sedgwick, Wyandotte, Shawnee, and Douglas counties have also posted net losses due to domestic migration, and among the largest counties in Kansas, only Leavenworth County has shown modest growth over the last five years of data. In 2023, Leavenworth County had a small gain of just under $10 million and approximately $84.5 million during the reporting period.
Trabert says the IRS data offers a similar cautionary tale for Leavenworth County.
“In 2023, Leavenworth County had net gains totaling $19 million from people leaving Johnson and Wyandotte counties, but it had a net loss of $9 million to other counties. Elected officials in Leavenworth County need to recognize that the small net gain isn’t necessarily a validation of what they are doing; Johnson and Wyandotte counties are chasing people away. That’s a competitive advantage that can easily disappear.”
Domestic migration trend reinforces that subsidies are not the solution to economic prosperity
Decades of domestic migration losses and economic stagnation indicate that a change in strategy is needed.
“Governor Laura Kelly declared that the $1 billion handout to Panasonic would transform the state’s economy, but it’s no surprise that that hasn’t panned out,” Trabert wrote. “Despite being in the fifth straight decade of economic stagnation, subsidies remain the bipartisan preference of state and local elected officials.”
While Republicans passed some income tax reform in 2024, it was watered down to avoid a gubernatorial veto. Kansas remains uncompetitive nationally and regionally in income, sales, and property tax rates.
Property taxes, in particular, are driven by out-of-control spending by local and county governments and stifle economic growth.
“The states with the lowest tax burdens have far superior growth in private-sector jobs and GFP, and they are gaining population from domestic migration,” Trabert wrote. “Spending control is the key because states that spend less can tax less and grow more. Both sides talk about supporting efficient spending, but there remains bipartisan resistance to rolling spending back to reasonable levels.”
The table below from KPI’s Responsible Kansas Budget is illustrative. State spending is about $10 billion higher than it would be if it had kept pace with inflation and population growth since 2005.
Spending has skyrocketed since 2020, and the blame, Trabert said, falls on both parties.
“Many Republicans say they are cutting spending when, in reality, they are only shaving a little off of Governor Kelly’s budget,” Trabert said. “Most Democrats blame profligate spending on the Republican majority, but it’s pretty well understood that they vote against budgets because the state isn’t spending enough.
“It’s long past the time to stop trying to disprove Einstein’s definition of insanity and get down to the hard work of making better use of taxpayer money. Until then, we can watch more people and their incomes leaving Kansas.”
