By Lionel D. Alford, Jr., Ph.D.
Even if we don’t discuss the economics of opportunity costs, that is who more productively can determine how to invest dollars: government or private individuals, government spending can always be shown to be a depletion of resources in an economy. This is because, the government taxes to get money to spend. Taxes are a burden on an economy that always reduces the overall wealth of the economy. In classical theory, those taxes are supposed to go to protect private property – in the modern era they do that, but also they are applied for all kinds of expenses from infrastructure (that can be a worthwhile expenditure) to wealth distribution (which many would argue is not a legitimate function of government).
In any case, money extracted from the economy by government is reduced in value first by required administration (approximately 20%) and second by waste, fraud, and abuse (about 20%). This means that for every dollar taken from the economy in taxes only about 60% actually gets spent on whatever the government applies it to. So for required government functions like police, fire protection, and real infrastructure like roads and sewers, this exchange is usually considered worth the expense. However for other expenses like loans, stimulus, and government’s generous giving, government’s taxes simply remove dollars from the economy that if left in private hands would truly grow the economy.
In the case of the city of Wichita, the city’s taxes simply remove money from the economy of Wichita, reduce its value through government handling and then disburse it to whomever the government deems worthy. This government giving reduces the overall standard of living in Wichita and is a spoils system for those who court the city government.
Big companies like Boeing, Spirit Aerosytems, Cessna Aircraft and Hawker Beechcraft look for one thing in deciding where to send business: the cost of doing business in an area. Cost of doing business is greatly affected by taxes and government interference. Because of taxes and government interference, Wichita is heading toward becoming the Detroit of aviation.
Kansas has a punishing tax system, tax structure, and over-regulation of business. States like Texas, Florida, Tennessee, and others don’t have any income tax—Kansas has a high income tax. Kansas taxes businesses. Business taxes only add cost to the consumer—businesses don’t pay any tax, they always pass it on to the consumer. Kansas has a high property tax. Kansas now has a sales tax and gasoline tax that is higher than the states around it. Businesses are regulated at a higher level than required by federal statues—that’s why aircraft painting and interior work is outsourced to Oklahoma and other states from Kansas. Wichita adds to these taxes and has its own spoils system. In addition, Wichita has a punishing code and regulatory system that makes business difficult. In regard to the Air Force Tanker deal and the 787 Dreamliner, Boeing is simply making an economic decision by sending its potential Tanker and Dreamliner business to other states. Just as my father, Lionel Alford, Sr. was deployed by Boeing, many years ago, to decide whether to keep Boeing Wichita open or not (he concluded they should), today Boeing has made that decision by selling part of itself to Spirit and reducing jobs in Wichita.
The only solution is for Wichita and the state of Kansas to reduce taxes and regulations to breathe life back into the Air Capital aviation manufacturing business. This means that the city has to give up its punishing codes and reduce taxes. If this doesn’t happen, Wichita will become the Detroit of Aviation.