Committee examines possible business tax

By Katie Roenigk, Riverton Ranger Via Wyoming News Exchange
Posted 10/19/21

Trying to make Wyoming less reliant on mineral wealth, legislators are considering a new tax for businesses in the state. 

The proposition generated what Shoshoni Mayor Joel Highsmith called …

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Committee examines possible business tax

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Trying to make Wyoming less reliant on mineral wealth, legislators are considering a new tax for businesses in the state. 

The proposition generated what Shoshoni Mayor Joel Highsmith called a “spirited discussion” at a meeting last week of the Wyoming Legislature’s Joint Revenue Committee. 

Highsmith offered feedback during the public comment portion of the Sept. 29 meeting, commending the revenue committee for moving forward with the new tax legislation. 

“I think the state needs to look at other revenue streams,” Highsmith said, pointing out that government bodies nationwide are passing laws to restrict coal-fired — or any carbon-based — power. 

“That’s just hard to believe, but it is [true],” he said. “It’s sad to say, but it’s going to be an uphill battle for that.” 

Some legislators at the meeting suggested waiting a few years to see whether the minerals industries rebound before implementing a tax on other businesses. 

But Wyoming Sen. Cale Case, R-Lander, said he was “astounded” that any of his fellow legislators “believe that our basic mineral revenues are going to keep up in the future.” 

“I mean, coal has gone from north of 400 million tons a year [to] well below 200 million tons,” Case said. 

Requesting a show of hand, he asked, “Does anybody in the room think that they’ll be mining coal in Wyoming in 10 years?” 

In response, one committee member suggested that the potential for a new port in the Pacific Northwest might spur coal activity in Wyoming, but Case discarded that possibility. 

“If they open up a port in the northwest, if it operated at full capacity, it would take the production of one mine — and that mine is going to be a Montana mine,” Case said. “We won’t even get on that gravy train.” 

He continued his line of questioning, asking, “Does anybody believe that people want to get off of carbon minerals?” 

“You can say that you don’t believe it,” Case said. “But our customers believe it. So you can say, ‘Well, I don’t want to do tax reform, let’s leave it on these carbon-based minerals because it’s all going to be OK.’ I don’t think it’s true, and I think the world has really changed on us. I’m not saying all those policies are for the best, but it’s reality.” 

He added that, if minerals do rebound, the state could rescind any new taxes it has implemented on other businesses. But Wyoming Rep. Chuck Gray, R-Casper, doubted that a new tax would ever be rescinded, “because there’s always another potential expenditure.” 

During the meeting, Gray criticized the state for its high rate of per capita expenditures, calling for increased efficiencies and suggesting that revenue increases be paired with decreases in taxes on the energy sector.

Case agreed that “we do have a very expensive form of government” — with 23 counties and eight community colleges, plus a university, for only 550,000 people — but he also recalled that recent legislative efforts to trim the state’s budget only resulted in about $500 million in cuts. 

“That’s the best we could do over pretty much years of trying — which was bloody and brutal,” Case said. “I have a hard time seeing how we’re going to fix this with more cuts … when we don’t have the ability to achieve that now.” 

Regardless, Gray urged the group to vote against the new tax bill draft, cautioning that the move would negatively impact the state’s ability to attract new businesses.

Case countered that Wyoming already has “one of the lowest corporate tax burdens in the country … if you’re not in the minerals industry.” 

“If that is such a great strategy, why is our population growth for the past two decades flat as a pancake?” Case asked. 

State Rep. Jerry Obermueller, R-Casper, offered an answer to the question, explaining that most companies that come to Wyoming export their products out of state and therefore pay income taxes in other jurisdictions. 

“It doesn’t matter to them that Wyoming doesn’t have any income tax,” Obermueller said. “What’s attractive to new businesses [is] all sorts of things that have nothing to do with that — labor force, amenities, all kinds of issues. … That’s the reason why our touting ourselves as a no-tax state just doesn’t work in recruiting business.” 

Case argued that prospective new businesses may also find it “unsettling” that Wyoming’s tax structure is based on “the future of carbon-based mineral taxes.

“I don’t know what could possibly be more uncertain than that,” he said. 

The committee voted 9-4 to draft a bill requiring businesses to disclose their total gross receipts, the portion of gross receipts earned in Wyoming, and the home state of the company or corporation for income tax allocation purposes, among other information.

The committee also voted 8-5 to draft a bill imposing a 7% tax on people who have “income from business activity in Wyoming.” 

The bill provides a mechanism for calculating the taxable income for businesses that earn money both inside and outside of Wyoming. 

The tax would not be implemented for four years, according to committee discussion, and it would not impact businesses that report less than a certain amount of income.

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