The Kansas House Taxation Committee heard testimony on a bill that allows cities and counties to impose a 1% earnings tax on non-residents who work there and use those revenues to offset 50% of the increasing property tax burden in the counties.
House Bill 2385 would authorize a public vote in a city or county to decide if that government entity could levy the tax on those workers who do not live in that city or county. Testimony before the committee indicated that both the city and the county could impose the tax on the same worker, unless exemptions reduced the potential 2% levy on the hypothetical employee.
The bill’s supporters appeared to be county officials and their representatives, seeking a remedy for ever-increasing property taxes, high on the list of legislative priorities in the 2026 session.
“Local officials cause unaffordable property tax increases by spending too much, but rather than treat the root cause, they push for another tax revenue source under the pretense of property tax relief,” says Dave Trabert, CEO of the Sentinel’s parent company, Kansas Policy Institute.
The hearing on the bill begins here at the 1:09:00 mark.
Jeff Culbertson is a Leavenworth County Commissioner, and has long been a supporter of the earnings tax as a replacement for all or part of the property tax bill. He said his county is unique in the state due to its federal government installations along with state facilities, schools and church buildings:
“We are 56% property tax exempt, 44% of everybody in our county are paying all the bills. To further add to this problem, seven out of our 10 top employers in Leavenworth County are property tax exempt. Additionally, the majority of the employees that work for those employers don’t live in Leavenworth County. All these non-residents drive on our roads and wear out our bridges, to get to their jobs in our county but they don’t pay anything; no taxes, no property taxes at all, to help build or maintain these roads and bridges.
“This all equates to eight out of 10 drivers, on Leavenworth County Roads, are not paying for them. Only two out of 10 drivers, are paying for everybody else. This is because the state only allows the county to use property tax. If the state allowed each county to vote on which tax system works best for them, Leavenworth County could cut our property taxes in half.”
Trabert says Culbertson’s exempt property excuse isn’t the reason property taxes increased so much. In an interview last year, he said the property tax exemptions have always existed and commissioners’ spending decisions are causing taxes to rise.
Mike Taylor represents the Kansas County Commissioners Association, and says his home county of Wyandotte has another issue to consider:
“We think that a local earnings tax would give many Kansas counties a reliable, robust revenue source that could significantly help reduce property taxes. Now, local earnings tax would not be viable option for all counties, but I believe it could certainly help border counties or regional centers, and it could be a major revenue source.
“As an example, I heard Kansas City mentioned, the 1% earnings tax in Kansas City, Missouri, (imposed in 1963) last year raised $270 million for that city. It was 44% of their city budget.
“I live in Wyandotte County, and we have thousands of high-paying jobs. In fact, some of the highest-paying jobs in the state. But 53% of those jobs are filled by people who do not live in Wyandotte County. They make their big paychecks, and they drive home, somewhere else to live.”
Taylor didn’t mention, however, that Kansas City and Jackson County still have a property tax crisis despite having an earnings tax.
Earnings tax opposition
Opposing the earnings tax measure was committee member Rep. Ken Corbet, who pointed out the decreasing population in parts of Kansas:
“If you’ve noticed that probably 80 counties or more have lost population in the last Census. And it’s bills like this that will increase that number; we’re losing Kansans every day. So, we need to turn this around and try to find some way to get people to come back here and not chase them away.”
Rep. Courtney Sappington testified to the committee that the proposed legislation violated a Constitutional principle:
“At its core, this bill violates a fundamental tenet of our nation’s values, which is taxation without representation. Any earnings tax that would be implemented as a result of this bill would be levied specifically against non-residents of any given municipality, giving them no recourse at the ballot box. The only behavior incentive here is negative, as Representative Corbett stated earlier, it gives men and women the incentive to find employment elsewhere. I represent many small bedroom communities south of Kansas City, so Edgerton, Wellsville, Baldwin City, and these large municipalities, with leverage and job density, would use this to leech money out of our communities and our families.
“We are taxed on our property, our investments, our purchases, our incomes, and our savings. Please do not give government another tentacle into our wallets.”
Eric Stafford, the newly-appointed CEO of the Kansas Chamber of Commerce, referenced the six-decade-old earnings tax in Kansas City, Missouri mentioned earlier by Mike Taylor of the County Commissioners Association as what Kansas should avoid:
“I think that the earning tax in Kansas City, Missouri, is a good example of what competitiveness can do to economic investment, and what it can do to deter investment. We would just strongly caution against this type of policy. We need to be looking at how we can grow our state.
“I understand this gentleman who spoke earlier about the challenges that counties face. We have 105 of them, and the salaries that go along with 105 of them. We have 4,000 tax entities, and the salaries that go along with them. And we’ve been delivering the same government the same way for 2.9 million people, and we’re third in the nation per capita in public sector employment, behind Hawaii and New York.
“And those are the hardest decisions (to reduce government employment), but the most effective way to drive change when it comes to property tax, and government services in the state of Kansas. So, we believe that this would be a very bad piece of policy for the state, going forward, and would encourage you to not support this bill.”
Professor Howard Wall of Lindenwood University in St. Charles, Missouri, issued a scathing study in 2020 on the effects on employment of the earnings taxes in Kansas City and St. Louis. Its summary:
The cities of St. Louis and Kansas City, Missouri, impose a 1 percent tax on residents’ earnings and non-residents’ earnings within the cities. This paper provides estimates of the effects of these taxes on the parts of Missouri outside the two metro areas. I estimate that over the decade from 2000 to 2010 the earnings taxes in Kansas City and St. Louis reduced household employment in the taxing cities by about 14,500, and by about 34,700 in the Missouri portions of their surrounding metro areas. When the link between the St. Louis metro area and outstate Missouri is considered, the state-wide employment loss from the cities’ earnings taxes rises to 60,500, or about two-thirds of the state’s total employment loss over the decade. In all, about three-quarters of the employment losses from the two cities’ earnings taxes were felt outside of the cities themselves, and nearly one-fifth was felt in outstate Missouri.
