Saturday, May 26, 2018

Another Report on the Wyoming Economy

I hear ever so often that Wyoming is a low-tax state, with all sorts of comments about how we pay only three grand per year but get $30,000 worth of government services back (a ridiculous notion that I have resoundingly refuted here, and here again). We hear references to the Tax Foundation's annual ranking of states by business tax climate, a publication that raises Wyoming to the skies but has practically no relation to the real world whatsoever.

In the midst of all this, it is good to see a publication that actually gets it right. The American Legislative Exchange Council has published the 2018 issue of its annual Rich States, Poor States report, and as everything Art Laffer puts out, it is a solid piece of research. It does not look at just one variable, or even one type of variable, but works its way through a spectrum of the economy.

The overall, materially important ranking in the report is the one on economic performance, where Wyoming ranks 43rd for 2018 and 47th cumulatively for the period 2006-2016.

This is exactly what I have been saying over and over again, for example in this article back in January, or in this one from April, where I pointed to the perennial stagnation of the non-minerals private sector of the Wyoming economy.

Employment is a related variable, one where I have also been persistently pointing to our state's endemic problems. As recently as in February I explained
Wyoming lost private-sector jobs in eight of the months in 2017, with only Alaska seeing as many months of decline. Seven other states experienced job losses at least one month: Kansas (6), West Virginia (5), Oklahoma (4), Louisiana and Mississippi (3), North Dakota (2) and South Carolina (1). For the entire year, only three states experienced a net loss of private-sector jobs: Kansas (-0.08 percent), Alaska (-0.89) and Wyoming (-0.94).
The Rich States report confirms this by ranking Wyoming dead last in employment, behind every other state in the Union. 

As for taxes, the topic that seems to cause the most confusion in the Wyoming political conversation, the Rich States report concurs with my analysis, dispelling the myth that we have low taxes:

--Our property taxes, counted per $1,000 of personal income, is the 8th worst - ranking 42 - of all states;
--The sales tax burden, also counted per $1,000 of personal income, ranks us 39th, with only eleven states having a heavier sales tax burden;
--Legislated tax changes for 2016 and 2017, counted the same way, leave us on 36th place; imagine where we would have been if the Taxmageddon package had passed.

Sure, we have a top ranking in income taxes, but that pales next to the trend in our tax policy. And, last but not least, the size of our government. The Rich States report presents its own version of the Government Employment Ratio, namely "public employees per 10,000 population". Wyoming comes out dead last again, with the highest ratio.

This, of course, confirms what I have been pointing out for years, namely that our Government Employment Ratio is the highest in the country.

There are some positive items in the report, such as a low minimum wage - leaving it to the market to determine the compensation of entry level jobs - and the fact that we are a right-to-work state. However, when we fail in the big economic categories, none of that matters.

The Rich States report confirms that we need a new governor who has pledged not to raise taxes, and who wants to lead a reform agenda to structurally reduce the size of our state's government sector.

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