A0478
Title: Kansas tax cuts and business liquidity
Authors: Yong Chen - Oregon State University (United States) [presenting]
David Guo - Wichita State University (United States)
Richard Acquah-Sarpong - Oregon State University (United States)
Paul Lewin - University of Idaho (United States)
Abstract: The impact of the Kansas tax experiment is examined on establishment-level payment practices, as measured by the PayDex score. The analysis focuses on the Kansas City Metropolitan Statistical Area (MSA), which spans both Kansas and Missouri, with its core comprising two adjacent cities: Kansas City, Kansas, and Kansas City, Missouri, situated on opposite sides of the state boundary. This unique geographic setting provides a natural comparison for assessing the tax policy's effects. Using data from the National Establishment Time Series (NETS) database and a two-way fixed effects model, it is found that the tax cuts initially improved timely payments among Kansas-based establishments, suggesting a temporary alleviation of liquidity constraints. However, these effects were short-lived, dissipating shortly after the tax cuts were repealed in 2017. The contribution is to the broader discourse on state-level tax policy by providing empirical insights into the transient nature of tax-induced financial benefits at the firm level.
