Study: Wyoming Has Capacity to Raise Taxes
As Wyoming lawmakers grapple with mounting budget deficits due to lost oil, gas and coal revenues, a new report by the Wyoming Center for Business and Economic Analysis showed the state can afford some tax increases without making the state less competitive with neighboring states for business development.
Nick Colsch, director of the Wyoming Center for Business and Economic Analysis and co-author of the report, said raising taxes could be done in a way that would not put an undue burden on low-wage workers.
"The two you'd want to avoid raising, to avoid hurting low-wage workers, would be the sales tax and fuel tax," Colsch explained. "Lower-income earners pay more of their income in percentage terms in those two taxes than do high income earners."
Raising commercial, industrial and residential property taxes would not impact most low-income workers.
Colsch's team compared Wyoming's tax rates to the median rates of surrounding states and found Wyoming could pay more because of the state's already low tax rates and lower cost of living.
Lawmakers have largely resisted raising taxes to stabilize budgets, warning it would blunt economic growth.
Colsch countered Wyoming's low tax rates don't always produce economic growth, and noted the state has seen slower gross domestic product growth over the past decade compared with states with higher taxes.
He added Wyoming's population declined every year between 2016 and 2019, in part because of budget cuts where teachers and other public-sector workers lost jobs.
"So then it forces jobs out of the state," Colsch observed. "We just have a large percentage of public workers, and so any time you're losing population due to an unstable state budget, it makes it harder to attract people."
Researchers project Wyoming could bring in more than $800 million in new revenues without putting the state at a competitive disadvantage. If the state adopted a tax code similar to South Dakota's, the study projects Wyoming could add $1.1 billion dollars to state coffers annually.