Wyoming’s tax policies have made the state an attractive haven for the private jet set to own homes. (BriYYZ / FlickrCC)

One of these days, Wyoming won’t be able to depend nearly as much on mineral tax revenues to pay for its schools, roads, hospitals, and other public services and infrastructure. We will need to find other sources of revenue.

Admittedly, that day won’t be tomorrow — recent estimates show that investment gains by the state, along with an uptick in oil revenues, have all but erased Wyoming’s latest budget shortfall. However brief this respite may be, it gives state lawmakers an excuse to perform their favorite tax reform-related activity: sitting on their hands and doing nothing.

But coal continues to wane despite changes in federal leadership, depleting one of Wyoming’s major revenue sources. Meanwhile, Wyomingites are working to diversify our economy to end the boom-and-bust cycle of mineral dependence. Many hope this process will also create new opportunities that keep young people from fleeing the state.

As we grow new industries in Wyoming, mineral taxes alone won’t be able to support the infrastructure they need to thrive.

Currently, mineral revenues cover somewhere in the ballpark of 65 percent of all Wyoming’s expenses. As that percentage shrinks—and as lawmakers find fewer and fewer ways to cut public services without harming our citizens—revenues from other sources will have to make up the difference.

The question, then, will be: Who pays?

That question — “Who pays?” — is also at the center of a report released last month by the Washington, D.C.-based Institute on Taxation and Economic Policy. The report, Who Pays? A Distributional Analysis of the Tax Systems in All 50 States, looks at the different tax rates people pay in the United States across income brackets. Its results should help guide any conversation related to tax reform in Wyoming.

Unsurprisingly, ITEP’s analysis reveals that one group among us pays just about the lowest tax rate of anyone in America: Wyoming’s ultra-rich.

Jackson Hole’s billionaires pay a tax rate three times lower than most working Wyomingites. With average earnings of more than $2 million per year — and most of that coming from “non-labor income” like investments — Wyoming’s richest one percent pays an average tax rate of just 2.6 percent. Meanwhile, the middle- and working-classes here sacrifice to taxes between 7 – 10 percent of what they earn.

Compare that to our neighbors in Montana. There, working- and middle-class folks pay a lower rate than they do here (between 6 – 8 percent), while Montana’s richest pay a much higher tax rate (6.5 percent).

The wealthiest Wyomingites also pay far less than the richest people in places like Oklahoma (6.2 percent), Alabama (5.0 percent), and Arkansas (6.9 percent). They even pay a lower rate than one percenters who live in other states that lack income tax, like Texas (3.1 percent) and Washington (3.0 percent).

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It’s no secret that very rich people “live” in Wyoming to avoid taxes. Former Wyoming gubernatorial candidate and multimillionaire Foster Friess resides in Wyoming because it’s the prettiest tax haven he could find. Teton County real estate websites often boast about the “tax advantages” of living in Wyoming to attract buyers for their multimillion-dollar “ranches.”

“Bloomberg Wealth Management magazine consistently rates Wyoming as the #1 Tax Friendly State in America,” the website for Live Water Properties coos. “Land ownership in Wyoming can offer significant reductions in federal income taxes through the strategic use of conservation easements.”

It goes on to offer properties costing upwards of $10 million.

Most people can’t even imagine what it would be like to possess this kind of wealth. You and I are concerned with things like mortgage payments, our children’s college tuition, saving for retirement, or that weird noise your car is making that might cost several hundred dollars to fix. These types of worries wouldn’t even register for Live Water’s customers.

Yet, in each of the rare instances when lawmakers have discussed moving Wyoming away from mineral-revenue dependence, they talk about things like raising sales or property taxes, or other types of hikes that would hit working Wyomingites hardest — while continuing to give the ultra wealthy an essentially free ride.

This is because the one type of common tax that would actually close the tax rate gap between what working Wyomingites and their billionaire “neighbors” pay is the tax people here hate most: income tax.

When — not if, but when — the day comes that Wyoming is forced kicking and screaming to give up some of its dependence on minerals, we’ll see if that hatred is strong enough for working people here to instead volunteer a bigger chunk of their own earnings, leaving the billionaires’ wealth safely intact.

Nate Martin

Nate Martin is the director of Better Wyoming. He lives in Laramie.

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  1. A consumption tax is economically equivalent to an income tax with a savings exemption, yeah, it benefits the rich, wish I had one though. My preference is for a consumption tax, as all wealth is eventually consumed and I like the idea of a savings exemption, however the least distorting tax is a property or land value tax. I also like that property taxes are the most painful to pay, meaning you get a bill in the mail demanding payment, really makes one feel the weight that our government has on the economy. Anybody for doubling property taxes and eliminating all others?

    A side thought: Ever notice there is never any talk of replacing the sales tax or property taxes?,,,, only adding more taxes… Divide and conquer, Turn one group against another and raise their taxes. Smokers, drinkers, the rich, those who like big cars, those that drive, The ratchet effect of an insatiable government.

    Here is an interesting chart showing Wyoming State and Local spending at 28% of GDP. 3rd highest in the country.

    https://www.usgovernmentspending.com/state_spending_rank_2019pF0c

    How about in Dollars/capita? 19,120. Behind only Alaska. Every neighbor except Nebraska (to include liberal Colorado and rural SD) is at 11000 or less….

    https://www.usgovernmentspending.com/state_spending_rank_2019dF0c

    By every, and any measure, we have one of the most bloated local governments in the US. Luckily due to coal and oil (all those companies are owned by poor people right?) we are flooded in cash (very little debt, praise God!).

    Yet this fool wants to raise taxes….

    How much is enough sir?

    1. Your thesis that Wyoming has a very high per capita tax rate and a ” bloated local government” is erroneously reasoned , even though the numbers do not lie. Because you forgot to factor oin the fact that Wyoming is the least populated state yet has to provide the same full ledger of basic services and governance as any state. Wyoming does not have the luxury of economy of scale in its revenues and expenses. We simply have fewer people or entities paying in but still have to do the work and provide the services.

      I have to assume on my end that you are an assertive anti-tax person who believes all taxes if not poisonous are at least debilitating. Except those roads don’t repair themselves, and both my local and county governments in Cody- Park County have done a very good job of cutting the fat and embroidery out of their budgets. Wyoming is prohibited by law from deficit spending…the budgets have to stay in line with revenue . never mind you overlook the fact that the PERSONAL tax burden on individuals and heads of household in Wyoming s among the lowest in the nation presently. has been for a very long time. You can’t blame high taxes for much of anything around here and make it stick. Therefore I find your arguments to be flawed.

      1. South Dakota, Idaho, and Montana spend less money in total then we do with a smaller population. I don’t think it’s an economies of scale issue. Oh and by the way, the product we get for our money is garbage. If adjusted for cost of living, our teachers are the highest paid in the nation. Maybe schools are better in Cody then Cheyenne and Laramie, but I don’t think they are known for their number of Ivy League grads either. But man are we good at checking boxes to ensure a great government pension!! (Ok That’s a little unfair, individuals just respond to whatever incentives are available).

        Personal taxes are low in Wyoming, and yes I am against raising them just to finance growth in a government that is already huge by every measure. Let’s shrink the government down, lower taxes even more and have a true competitive advantage. Let’s make Wyoming the best place in the world to establish and grow a company. If it already is, then make it better.

  2. So if I had 100 million and owned property worth 10 million wouldn’t I pay a lower rate than someone who lived paycheck to paycheck with property worth 50 thousand? My CPA wife has always told me that a person could use statistics to prove any point.

  3. Have you noticed that the roads leading to billionaire ranches are all County roads? That means Wyoming taxpayer-funded county maintenance crews plow snow for them to access their “homes”.

    Hmmm, pay no taxes and receive public services. Isn’t that the definition of public welfare?

  4. The U. S. was the most admired and respected country in the world when it had a middle class, center out economic system.

  5. It is a sad day when Wyomingites start envying the money of others like a common Californian. Where ever a wealthy person goes a trail of money is left behind. Foster Friess’s wealth is spread voluntarily throughout Jackson Hole and the world, do a story on that!

    When I moved to Jackson in 1987, I did well not not starve to death 7 months of the year, Then the wealthy people came. All of the sudden the construction industry boomed, even in winter there was work because they didn’t care about the extra cost. Trickle down tricked down to me.

    I am no longer in construction but I have a few rich local clients and I treasure the treasure they pass along to me, Not treasure I envied and taxed away from them but treasure I earned from them.

    Tax breaks have a purpose, it is to keep risk takers taking risks. Most in society don’t like risk; hence, don’t build much wealth. Those who chose a secure stipend instead of the terror of risk will never understand why risk takers are rewarded with tax breaks and the forgiveness of Bankruptcy laws. Yes, journalists would usually fall into that envious class while complaining about the meager stipend.

  6. Wouldn’t it be nice if the Wyoming legislature went after these ultra-rich guys. To think that they pay a lower rate of their net income than I do is totally absurd. Wake up Wyoming! Taxing the 1%ers to make them pay their fair share would go a long way toward a more predictable revenue stream for our state.

  7. Why are we footing the bill for billionaires? Simple. Because we are stupid and ignorant. We return the same servants of wealth to elective office, at all levels of government, time after time. We celebrate our billionaires, just like good serfs should …

  8. Very interesting choice of airplane photograph to accompany this article.
    The tail number and logo on the back tells all : the standard FAA registry number N227SV, and the logo of the Boston Red Sox baseball organization. It is a Gulfstream IV built in 1991 and currently owned by Assembly Point Aviation of Hanover Massachusetts. Not sure if this particular stock photo from Flickr has any relevance to Wyoming tax haveneers, but that exact plane has a spectacularly mysterious dark history.

    It appears this plane has been used by the CIA to covertly escort terrorist suspects to black sites all around the settled planet. Between June 2002 and January 2005, the Gulfstream N227SV made 51 visits to Guantanamo Bay, Cuba, site of the U.S. naval base where more than 500 terrorism suspects are behind bars. During the same period, the plane recorded 82 visits to Washington’s Dulles International Airport as well as landings at Andrews Air Force Base, Md., outside the capital and the U.S. air bases at Ramstein and Rhein-Main in Germany.
    The plane’s flight log also shows visits to Afghanistan, Morocco, Dubai, Jordan, Italy, Japan, Switzerland, Azerbaijan and the Czech Republic. Apparently , this airplane appearing in this article on Wyoming tax shelters was an airborne Über in the darker channels of geopolitical globe-trotting. I can only speculate that the Boston Red Sox logo gave it cover. The stuff of disinformation and intrigue in the age of the War on Terror.

    The Gulfstream is well known to public watchdog ” tail spotters” who keep track of this sort of stuff in the public interest . They publish their work , which is why I am able to illuminate it here.

    If you would like a more sanitized photo of a real billionaire’s personal jet sitting at the Yellowstone Regional Airport in Cody, I can abide. We see them all the time. I sorta take note of high dollar aircraft when they traverse the skies over Cody. I recall the day a few years ago when the luxury general aviation lounge at YRA was seating Bill Gates, Warren Buffet, and Rupert Murdoch on a Saturday morning in August, here as guests of Herbie Allen who keeps a billionaire’s retreat here when things get too stuffy at his Sun Valley Idaho enclave.

    Wyoming has always been a tax haven. Outrageously so. But does anyone really believe the Wyoming legislature will reform the tax code to disfavor the billionaire’s tax shelters when we can’t or won’t raise the wholesale tax on beer from the 2 cents per gallon assessed the same since the end of Prohibition in 1935 ? Never mind that Hawaii’s tax on beer is 45X higher ( 90 cents per gallon ) , yet a six pack of canned Budweiser sells for much less in Honolulu than it does in Laramie, even though the beer in Honolulu has to be barged over from the mainland and the beer in Laramie was trucked a hundred miles.

    We really need to reform the entire Wyoming tax code from the ground up, and not cut the billionaires and beer moguls any favoritism when we do it…