When Gov. Sam Brownback boasts about new business formations in Kansas, skeptics have questioned how many of those businesses are new and how many are existing businesses that merely reorganized to take advantage of the state’s tax exemption on pass-through income. A task force on improving the state’s tax estimates examined that question. It found that the rate of increase in pass-through entities and the rate of reduction in C corporations were about the same after the tax exemption went into effect in 2013 as they were before then. That suggests the tax exemption hasn’t triggered a surge of business reorganizations – though it also suggests that the tax policy hasn’t spurred much growth. – Phillip Brownlee
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