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Friday, June 23, 2017

Losing Population And Per-Capita Income

On Wednesday I explained that the Republicans here in Wyoming who stalwartly hold on to the idea of higher taxes, are doing to our state what the Democrats in Illinois are doing to their state by stalwartly holding on to the idea of higher taxes.

If Illinois is not scary enough, perhaps the tax hikers here in Wyoming would like to see some recent data on state-level personal income?
The tax base they so eagerly want to milk for more money is shrinking, slowly but steadily.

Starting with the latest inflation-adjusted numbers, released by the Bureau of Economic analysis yesterday, our state once again ranks at the national bottom:*

Real personal income growth, 2015
1 Delaware 7.05% 26 New Mexico 3.85%
2 District of Columbia 6.64% 27 Texas 3.77%
3 Oregon 6.12% 28 Kentucky 3.75%
4 California 6.05% 29 New York 3.73%
5 Utah 6.05% 30 Pennsylvania 3.47%
6 Massachusetts 5.28% 31 Wisconsin 3.44%
7 Tennessee 5.12% 32 Iowa 3.42%
8 Florida 5.10% 33 Alaska 3.39%
9 Nevada 4.98% 34 Louisiana 3.32%
10 South Carolina 4.77% 35 Alabama 3.31%
11 North Carolina 4.60% 36 Illinois 3.19%
12 Michigan 4.58% 37 Colorado 3.19%
13 Idaho 4.50% 38 Missouri 3.19%
14 New Hampshire 4.34% 39 Montana 3.18%
15 Virginia 4.31% 40 Ohio 3.14%
16 Rhode Island 4.31% 41 Vermont 2.81%
17 New Jersey 4.27% 42 Maine 2.72%
18 Maryland 4.27% 43 Connecticut 2.47%
19 Washington 4.22% 44 Kansas 1.93%
20 Arizona 4.19% 45 West Virginia 1.59%
21 South Dakota 4.09% 46 Mississippi 1.58%
22 Georgia 4.01% 47 Arkansas 1.41%
23 Minnesota 3.94% 48 Oklahoma 1.26%
24 Hawaii 3.92% 49 Nebraska 0.70%
25 Indiana 3.90% 50 Wyoming 0.51%



51 North Dakota -2.31%

If we adjust these numbers per capita, the situation is about as bad. Our state's population basically stopped growing in 2015, with an uptick of only 0.5 percent. This was well below the national population growth of 0.73 percent. In 2016, our state's population declined by 0.18 percent. Only four states fared worse: Connecticut (the nation's new Tax Hell) -0.23 percent; Vermont (crashed single-payer health care still costing them) -0.24 percent; Illinois (no comment) -0.29 percent; and West Virginia (where tax hungry coal-union Democrats and tax hungry anti-coal Democrats come to party) which lost 0.54 percent of its population in 2016.

Now: when was the last time Wyoming lost population?  As recently as in 2009, when I first moved to Wyoming, our state's population grew by more than 2.5 percent. Now people are leaving our state, but it is important to note that the outbound migration trend did not start in 2016. It has started much earlier than that in most parts of the state; the main reason why we registered population growth in 2011-2015 is that tax-weary Coloradans moved up to the Cheyenne area. Preferring long commutes on I-25 to urban-combat style traffic in Fort Collins, they are here only because the lower cost of living and the absence of an income tax allows them to live a bit better here than down there. 

So far. If we start raising taxes right, left, up and down - as our Joint Revenue Committee would like to do - then the only corner of the state that has seen a decidedly positive population trend in recent years will start seeing a pearl string of U-Hauls heading south again.

As if a declining population was not bad enough news (on top of declining private employment, stagnant or declining household income, disastrous real-estate markets in some counties...) we are now seeing a decline in per-capita disposable income. Having decline in three out of the four past years, per-capita, after-tax earnings in Wyoming has has the second-worst development in the nation two years in a row:

>In 2015 per-capita disposable personal income declined by 0.4 percent; only North Dakota did worse at -3.84 percent;
>In 2016 per-capita disposable personal income declined by 0.63 percent; it was worse only in Alaska (-1.17 percent).

Here are all the 50 states in 2016:

Figure 1


In other words, Wyoming is losing both disposable income on a per-capita basis, and population. This means that our total disposable personal income is in decline - $236 million in 2016 - which in turn means that the very tax base that the majority on our Joint Revenue Committee so eagerly wants to increase the burden on, is slowly going away. Please keep in mind that the disposable-income numbers that we are looking at here, have already been adjusted for the taxes that we as taxpayers are currently paying. 

Regardless of what taxes our elected officials want to increase (or, more correctly, those who have not yet pledged to not raise taxes, still want to increase) the revenue they want will eventually come out of our earnings. A sales tax increase grabs more money as we spend; higher excise taxes, user fees and other taxes on consumption work the same way; property taxes are paid out of current income (so there is only a limited relation, actually, between our earnings and this particular tax burden - yet we pay it out of current income); and a gross receipts tax will force employers to take money away from all other expenses as the cash comes in the door - including what they pay their employees.

And let us not even get started on an income tax.

I want to acknowledge all those members of our state legislature who have pledged never to vote for a tax increase. They are showing backbone in the face of strong statist headwind - the same statist headwind that is blowing in the face of Republican Governor Rauner in Illinois. 

So far, Senate President Bebout has shown admirable resistance to the very idea of higher taxes. What worries me is what may happen on the Senate side if Bebout is no longer its president. 

Just a thought to throw out there, folks. 
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*) All numbers in this blog are from the Bureau of Economic Analysis, State Personal Income database.

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