Should Wyoming lawmakers, facing $1.5 billion shortfall, consider individual income tax?
CHEYENNE, Wyo. | Eric Galatas, (Public News Service) – As Wyoming lawmakers face a $1.5 billion budget shortfall, a new report by the Institute on Taxation and Economic Policy suggests it might be time for the state to consider implementing a reliable, renewable revenue stream: an individual income tax.
Meg Wiehe, deputy executive director with the institute, said adding an income tax to Wyoming’s current mix of mineral, excise, property and sales taxes would put the state in a better fiscal position during downturns in the fossil-fuel sector.
“But it would also give state lawmakers a tool to tap to ask those richest households, who are weathering this crisis quite well, to chip in more, to allow the state to be able to continue to make much-needed investments during this time,” Wiehe said.
Wyoming is one of just seven states that do not tax individual income. Opponents have argued a personal income tax could make retirees think twice before retiring in the Cowboy State, while others worry any tax increase could hurt the economy because people would have less money to spend.
Wiehe said without additional revenue streams, cuts in critical state and local investments, including health care and education, are likely to make the economic crisis brought on by COVID-19 worse and increase income inequality for years to come. She said with Congress stalled on providing additional aid to states and municipalities, the ability to tap Wyoming’s wealthiest earners could save important programs, without putting additional stress on the economy.
“The truth is, the more income you have, the less you are actually likely to spend in the economy,” she said. “You are more likely to put that money into saving or into investments, not into purchasing goods and services.”
New Jersey Gov. Phil Murphy’s recent budget plan calls for taxing millionaires; lawmakers in California, New York and Rhode Island also have proposed higher taxes on their wealthiest residents to help close pandemic-related budget shortfalls.