Wyoming is one of two states that does not impose a corporate income tax on employers, but that could change in 2020. Earlier this year Wyoming lawmakers debated legislation, House Bill 220, that would institute a 7% state corporate tax. The Wyoming House of Representatives passed that bill but the Legislature adjourned without the state Senate doing likewise. However that proposed corporate tax, as was predicted at the time, did not die with the 2019 legislative session. The proposal is now back and primed to pass both chambers of the Wyoming Legislature in 2020.
This week the Wyoming Joint Revenue Committee approved a new version of the proposed corporate tax, which would apply to companies with more than 100 shareholders by a 9-4 vote. Were state lawmakers to enact a corporate tax in 2020, that would have Wyoming moving in the opposite direction of many states and nations, which have been cutting their corporate taxes in recent years.
While proponents of the proposed corporate tax portray the levy as a way to soak large corporations, the burden of a corporate tax would be borne by both business owners and workers. That’s why key non-partisan fiscal scorekeepers, such as the Congressional Budget Office and the congressional Joint Committee on Taxation, have adjusted their methodology in recent years to account for the harm corporate taxes do to workers.
In addition to the tens of millions of dollars it is estimated the proposed corporate tax would siphon from employers to fill state coffers, the corporate tax advanced by Wyoming Revenue Committee members this week would also lay the groundwork for a personal income tax.
“The bill has a little-noticed feature in it that allows for the creation of a personal income tax,” explains Sven Larson, a senior fellow at the Wyoming Liberty Group, a Cheyenne-based think tank. “If this bill becomes law Wyoming will have the legal infrastructure in place for both a corporate and a personal income tax.”
In addition to the costs a corporate tax would impose on businesses and the negative impact it would have on the state economy, a corporate tax would cost Wyoming taxpayers millions of dollars just to collect.
“The system to collect these taxes would cost $10 million to set up and $3 million to maintain, along with $1.5 million for staff – costing essentially 10 percent of the rough revenue estimate annually,” the Casper Star-Tribune reported earlier this year as the corporate tax proposal worked its way through the Legislature.
There is a wealth of social science demonstrating that corporate taxes are one of the most economically destructive ways to fill government coffers. That’s why states across the country and nations across the globe have been cutting corporate tax rates and reducing their reliance on them in recent years.
The corporate tax isn’t the only tax hike threat facing individuals, families, and employers across Wyoming. State lawmakers in Cheyenne are also advancing tax hikes on property, sales, and nicotine. Altogether, 2020 is shaping up to be Taxmageddon in Wyoming.