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Friday, October 6, 2017

More Taxes Coming Your Way

Last week I reviewed the tax increases we can expect from the state legislature and the governor's ENDOW program, as well as some of the demands from the Wyoming Association of Municipalities. I concluded that in total, we are looking at about $500 million in higher taxes on families and businesses here in Wyoming.

Sadly, that is not all.



There is more at the local level. In Teton and Campbell Counties, for example. To start with Campbell, there is an aggressive campaign up there to squeeze another quarter-percent sales tax out of taxpayers in the county. Supporters of the higher tax, which include county commissioners, Gillette College and the Energy Capital Economic Development Corporation, claim that the tax will generate about $5.2 million in new annual revenue (a reduction from earlier estimates putting the expected revenue at $6 million). They also suggest that 
A family of three, with an average income of $45,000, will pay an estimated $27 per year, or slightly more than 7 cents per day.
If we assume that $27 per day is the total of a per-capita amount per family member, then the average cost of this tax increase, per every man, woman and child in Campbell County, would be $9. With 49,000 residents in the county, that adds up to a total of $441,000 in new revenue. 

Fortunately, there is a new group out there trying to counter the tax-hike campaign. Citizens Keeping Campbell County Great has their work cut out for them, because the pro-tax campaign is desperate to raise those $5.2 million. 

At the same time, opponents to the tax increase also have a lot going for them. For one, pro-tax pundits carefully avoid to mention that they rely heavily on Campbell County businesses to shoulder almost all the burden of the tax increase. With $441,000 coming from households, this leaves $4,759,000 to be paid by Campbell County businesses. According to the Bureau of Labor Statistics there are about 1,700 private "establishments" - businesses - in that county, putting the average cost of this new tax at $2,800 per year. Obviously, the actual burden will vary a great deal between businesses, but this is the average cost increase.

We can look at it from another viewpoint. The $27 per family of three looks so insignificant that one has to wonder what the fight is all about. The problem is that when we take the tax burden into the business sector, things no longer look as bright as they may have done before. Again using Bureau of Labor Statistics data, private businesses in Campbell County will pay out approximately $1 billion in wages to their employees this year. With the annual cost to businesses of the sales-tax hike being $4.7 million, this translates into a 4.7-percent tax increase on top of the wages.

Suddenly, the tax hike does not look so good anymore. I am sure there are businesses in Campbell County that can pass a cost increase of that magnitude on to its customers, without even blinking, but I am equally confident that there are businesses who cannot take a tax hike that has the same effect on their bottom line as a 4.7-percent increase in their cost of wages.

Proponents of this tax increase claim that they can attract new businesses to the state by spending the extra tax revenue on economic development - and ostensibly by hiring more faculty at Gillette College (the president of which consistently claims that right now, he cannot afford to lighten the teaching load for his math professors). Proponents claim that the Energy Capital Economic Development Corporation and the college together will bring new workers and new jobs to the county.

Even if we accept the premise that economic-development spending could bring in new jobs that would otherwise not have come (a premise that does not appear to be supported by good research), the problem is that the tax would go up before businesses would consider locating to the county. With higher taxes in place, the county has put itself at a further disadvantage relative other parts of the state. 

And we have not even begun adding the state-level tax hikes that most certainly will pile on more costs for doing business, in Campbell County as well as in Wyoming as a whole. Tax-hike advocates in Campbell County dismiss the threat of higher state taxes by saying that there are always proposals for higher taxes in every legislative session, and that almost none ever pass. Generally, this is a true statement, but in my nine years here in Wyoming I have never seen a session where the legislative leadership and the governor have been so in sync, and so adamant, about raising taxes. 

Only a fool - or a raging statist - would dismiss the threat of hundreds of millions of dollars in tax hikes.

Campbell County is not the only corner of the state where they are planning tax hikes. There is a campaign going on in Teton County, to which I will come back in another article. There is also an attempt by Laramie County Community College to get taxpayers behind new bonds. While technically not a tax hike, any taxpayer guarantee of that kind is de facto a promise to raise taxes in the future. 

I have said this before, and I will repeat it again, and again: Wyoming cannot afford higher taxes. It is time for our elected officials to stop running back to taxpayers as soon as tough economic times would scratch their proverbial finger. Taxpayers are suffering as it is; families all over this state are struggling just to keep up. If taxes go up by $500 million, they will on average be hit by almost $1,000 combined in the form of higher taxes, lower earnings and increased cost of living - per family member.

Then add the tax-hike proposals from your county, city or special district.

Can you afford it?

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