RHOADES: Entrepreneurship in Kansas

This month, Leadership Kansas 2009 included a visit to Hutchinson and tours of Spirit Aerosystems in Wichita, the El Dorado Corrections Facility, and discussion panels at Butler County Community College, and WSU's Center for Entrepreneurship.

Our region has long attracted entrepreneurs who have a desire to create, develop, and distribute products and services that add choice and value to our lives — entrepreneurs who are known to dream big, take action, manage risk, and turn ideas into realities.

For example, Beth Tully launched Cocoa Dolce Artisan Chocolates after experimenting with candy recipes. That was the 1990s.

Today, her award-winning chocolates are sold in Wichita and online.

Bill Lear of Learjet fame developed the first car radio, radio direction finders, autopilot and first fully automated aircraft landing gear system, among other things.

He tried selling his plan for mass-producing business jets, but there were no takers until he moved to Wichita in the ‘60s.

His legacy helped establish Wichita as the Air Capital of the World.

Dan and Frank Carney had just graduated from WSU when they opened their first Pizza Hut in 1958 with $600 borrowed from their mom.

They grew up working at Carney Grocery on the east side. An acquaintance who worked at Boeing made great pizza. He taught them how.

They perfected the sauce and their system.

Franchising was a new concept. As Mr. Carney tells it, when he heard about the International Franchising Association, he was the first person to every meeting, determined to learn and avoid mistakes others had already made.

In 1925, Fred Koch moved to Wichita and formed Winkler-Koch Engineering.

Today, Koch Industries is the largest privately owned company in the country.

We heard from Rollin Karg of Karg Art Glass in Kechi. Karg worked in corporate settings, but after taking a glass-making class in Emporia, decided to redirect his time and talents.

Starting in a small shop on his own property, he eventually quit his day job and built a larger facility.

Now he makes a living doing what he loves. The gallery is just north of Wichita.

This entrepreneurial motivation spawned the WSU Center for Entrepreneurship.

The center helps budding entrepreneurs navigate the complexities of business plans, funding sources, and so on.

A common theme from the WSU panel was passion and a business climate that encourages individuality and innovation.

As the state faces continued bad news about lower than expected revenues, what we need in order to get revenues back on track are jobs, jobs, and more jobs.

Some people's default setting is always to raise taxes in order to raise revenue, but when taxes go up in a bad economy, or go up too fast or too far, the natural result is for individuals and businesses to hunker down, downsize and dial down spending, which means fewer business start ups, and retractions, rather than expansions of existing businesses, i.e. more layoffs, limited new job creation, and fewer jobs all around.

The Organisation for Economic Co-Operation and Development “brings together the governments of countries committed to democracy and the market economy from around the world.”

The United States has the highest corporate tax rate of all OECD countries.

Some 2008 example rates: U.S. (35), Japan (30), UK (28), Korea (25), Canada (19.5), Germany (15.8), Ireland (12.5). By the way, while Ireland has seen its economy slow in a global recession, it has been an economic superstar for decades.

Not long ago, it was one of the poorest European nations. Today, it’s one of the world's wealthiest, quintupling its economy since 1973.

In addition to federal corporate taxes, most U.S. states take an additional percentage, as well.

Of the adjusted 2008 combined federal and state/province rates among nations, there are 24 U.S. states with higher corporate tax rates than all OECD countries.

Kansas is one of them.

Combined 2008 federal and state/province rates for Kansas (39.8), Japan (39.54), U.S. (39.3), Germany (38.9), Canada (36.1), UK (30), Korea (27.5), Ireland (still just 12.5).

For anyone interested in equity and a level playing field, this may challenge their conventional wisdom.

For anyone interested in reducing layoffs and increasing job opportunities in the United States, this should matter.

While the United States experiments with giving government more responsibility for the private sector, former Soviet-bloc nations have been-there-had-it-done-to-them.

They know what it does to an economy.

Just last week, Hungary voted to lower its personal income taxes for average-income earners, reduce social security contributions for employers, add a real-estate tax for 2010 and increase one of its value-added taxes.

In a manner of speaking: taxing consumption and rewarding earnings.

Hungary’s government estimates the net result to be revenue neutral — no less money for the government; but for stimulating their economy?

Let’s just say, if you’re investing in emerging markets, “Go east, young investor.”

The only way to generate sustainable revenues is through real job creation and for that you need to encourage an entrepreneurial spirit.

From the mission statement of Cocoa Dolce Artisan Chocolates: “... we believe in following our own path. Leading, rather than following where others might go. Innovating instead of replicating the successful formulas others might embrace.”

I have one word for that kind of vision ... sweet.

Marc Rhoades represents District 72 in the Kansas House of Representatives. He can be contacted at rhoades@house.state.ks.us. To receive his articles electronically, contact the same e-mail address.