Saez: Yes. Kansas is an interesting case study, and I think it illustrates beautifully from a research perspective even though it’s a disaster in terms of public policy. This issue with tax avoidance, the second aspect that I discussed, is what Kansas experienced when it lowered or even effectively eliminated taxes on the profits of pass-through businesses under individual income taxes. The state provided huge incentives for high-income earners to reclassify, say, their compensation from wages toward pass-through businesses.
Source: In Conversation with Emmanuel Saez – Equitable Growth