A Fox Business story recently referenced a Cato Institute study showing Kansas as having one of the most business-friendly regulatory environments in the nation.
And indeed, according to “Freedom in the 50 States” index — last updated by Cato in 2023 — Kansas ranks first in regulatory freedom, overall.
It would seem, from that ranking, that Kansas should be doing well. But Kansas ranks #23 on tax competitiveness according to the Tax Foundation, IRS migration data shows a net loss in domestic outmigration of nearly $8 billion in adjusted gross income in the last 30 years, the latest “Rich States, Poor States” report by the American Legislative Exchange Council (ALEC), shows that Kansas has the worst economic outlook in the region, falling from 23rd to 30th, and continues to have some of the highest electric rates in the area.
Cato Senior Fellow Steven Slivinski said in a recent phone interview that simply taking the regulatory environment at face value misses the point.
“If the response to ‘Oh, hey, we’re not generating enough jobs,’ is, ‘Yeah, but we’re number one in this edge case category of some sort,’ then it’s just not a compelling argument, right?” Slivinski said. “It doesn’t solve the actual problem.
“Also bear in mind, this is one thing that we cautioned the Fox News reporters (about), but they still used it: this ranking is relatively old. The most recent edition was published in 2023, so I know things have changed, actually, in a lot of states since then.”
Economist comments on Cato regulatory ranking
Vance Ginn, senior fellow at the Kansas Policy Institute — which owns The Sentinel — said while the regulatory environment in Kansas may be better than some states, as noted in the 2023 Cato analysis, a more holistic approach is required.
Ginn said he read the Fox story and thought “okay, well, yeah, they may be number one in this, but there are other measures why people leave and why people stay in a certain place, and especially when you have a high cost of electricity, taxes, you know, have been coming down some, but not relative to other states.”
Ginn said ultimately, people vote with their feet.
“What that indicates to me is that there’s still an incentive for people to leave Kansas and to move to nearby states,” Ginn said. “Long story short, there are a lot of policies that go into reasons why individuals or businesses stay or leave, relative to just regulation. So that’s where you look at excessive government spending, higher taxes, higher lawsuit abuse, all those things also contribute to why people are leaving.”
In a recent article for KPI, the level of taxation in Kansas — when looked at in aggregate — is crushing.
“The tax structure helps explain the exodus,” Ginn wrote. “Kansas ranks 26th on corporate taxes, 28th on individual income taxes, 21st on sales taxes, and 26th on property taxes, based on the Tax Foundation’s state tax rankings. Its one strong component, unemployment insurance taxes, does nothing to attract workers or businesses. Every category that drives investment and growth sits in the bottom half.
“The individual income tax is the clearest self-inflicted wound. A 28th-place ranking means Kansas is still penalizing work, savings, and entrepreneurship more than it should in an economy where people and businesses can relocate freely.”
Kansas also routinely ranks near the bottom in government employees per capita, and according to KPI’s 2026 “Green Book,” Kansas is once again 48th in the nation, with 699.3 state and local employees per 10,000 residents.
“Government employees cost money,” Ginn said. “That cost taxpayer money, and what we’ve seen is that the government employment has grown at a greater rate than the private sector employment, and what that does is it shifts more of the burden on a growing number of people in government on a smaller number of people in private sector employment as the growth increases at a slower rate for the private sector, and so that puts a larger burden on individuals and businesses to pay for that government employment that continues to grow at a rapid rate.”
Ginn said if a state doesn’t stay ahead in the competition between the states, “then you’re going to lose and people are going to vote with their feet.”
“That’s almost econ 101, if you don’t like where you’re at, what you’re doing, you move, you do something else,” Ginn said. “And that’s exactly what people are doing when they’re leaving on-net from Kansas and going to other states. So we must look at other factors, other than just this regulatory climate, which, of course, is important. A bad regulatory climate, well, that’s going to make things even worse. So things could be a lot worse in Kansas, had that regulatory freedom not been as high.”
