It was reported in multiple news outlets earlier this week that House Bill 220, legislation pending in the Wyoming Senate that would impose a 7% state corporate income tax on certain companies, had been defeated in committee on Tuesday and was officially dead for the year.
That is no longer the case. According to sources on the groud in Cheyenne and an article published in the Casper Star-Tribune last night, some Wyoming lawmakers are making an aggressive push to revive the corporate tax and ram in through int the final days of the legislative session, which ends next week.
In response to the rumored push to revive the proposed corporate tax and pass it in a hasty and opaque manner, Americans for Tax Reform sent the following letter to Wyoming Senators last night urging them to reject this effort:
To: Members of the Wyoming Senate
From: Americans for Tax Reform
Re: HB 220 & Efforts to revive and rush through a corporate income tax
Dear Senator,
I write to address persistent rumors that HB 220, legislation that would impose a corporate income tax, may be resurrected in an amendment to another bill. I urge you to reject calls to revive the 7% corporate tax included in HB 220 and rush it through before the session ends next week. Were the state’s first income tax to be instituted in such a hasty and opaque manner, it would send a truly terrible message about what kind of place Wyoming is to do business.
Imposing an income tax that will have unintended negative consequences is bad enough. It’s even worse when it’s done in a rushed manner, with rules and typical procedures suspended. Do Wyoming lawmakers want their state to be a place where a major new tax can be imposed rapidly, through opaque machinations that bypass the typical committee process and disregard established deadlines? We’ll soon find out. If so, it could have a chilling effect on in-state investment.
The claim that this proposed 7% tax is merely capturing revenue that is already taxed in other states in not accurate. Many other states lack throwback rules, making this proposal mostly a new tax liability. As the non-partisan Tax Foundation has pointed out, HB 220 is not a costless tax. It would harm the state’s economy and business tax climate. This corporate tax wouldn’t just capture money for Wyoming coffers that otherwise would have gone elsewhere. This tax would hit Wyoming residents, perhaps through higher prices, possibly in the form of fewer options, or both.
A Corporate Tax Harms Workers, Not Just Owners Of Capital
In recent years the major non-partisan federal government scorekeepers acknowledged for the first time ever that corporate taxes, and corporate tax hikes like those proposed by congressional Democrats and now state legislators in Wyoming, are borne in part by workers.
The congressional Joint Committee on Taxation (JCT) announced in a 2013 study that the JCT would henceforth be reporting the affect that corporate taxes and corporate tax changes have on both labor and capital. Prior to that 2013 change, JCT models assumed that the burden of corporate taxes was borne entirely by the owners of capital (stocks, bonds, mutual funds, IRAs and so on).
That move by the JCT five years ago followed similar model adjustments by the Treasury Department and the Congressional Budget Office that account for the share of corporate taxes borne by labor. Interestingly enough, it was during the Obama administration, which enacted billions of dollars in higher taxes, that key non-partisan fiscal scorekeepers began to formally recognize that corporate taxes are paid for, in part, by workers in the form of lower pay, fewer benefits, and reduced job opportunities. As such, by imposing a state corporate tax, you and your colleagues would harm workers and shareholders alike .
A Terrible Time for a Tax Hike
It’s no coincidence that the U.S. has reclaimed the number one spot on the World Economic Forum’s Global Competitiveness Index following enactment of federal tax reform that significantly cut federal income tax rates, both personal and corporate. It’s clear that many investors, CEOs, and site selectors are bullish on the U.S. relative to other potential destinations for their capital.
Yet once business owners or investors make the decision to bring new capital or create jobs in the U.S., either by relocating or expanding operations stateside, they then have 50 choices before them when it comes to which state to choose. That’s why it is more important than ever for legislators in Cheyenne to do everything they can to make Wyoming a more attractive place to invest, do business, live, and raise a family.
Your constituents are counting on you to protect their pocketbooks and to reject misguided proposals that would harm the Wyoming economy. As such, I urge you to reject efforts to bring HB 220’s 7% corporate income tax back to life. I thank you for your public service. If you have any questions or if ATR can be of assistance, don’t hesitate to contact me at 202-785-0266.
Sincerely,
Grover G. Norquist
President
Americans for Tax Reform