Wyoming currently has the 49th lowest tax burden in the country. (401kcalculator.org/FlickrCC)

About half the revenues into Wyoming’s general fund and budget reserve account come from mineral taxes. Those are paid by someone, just not us. And let’s not forget that if 60 million years ago the peat bogs in Campbell County had formed 100 miles to the east, all that revenue would have gone to South Dakota. There is a difference between being fiscally conservative and being lucky.

Despite all that revenue, we’re still going broke. Wyoming is expected to overspend our revenue by about $300 million each year going forward, and the problem is going to get worse as mineral taxes continue to decline. 

Meanwhile our expenses are going to rise. Our population is aging at a rate that exceeds every other state. We know as the population ages the economic burden increases due to rising healthcare costs. Then there’s the deferred maintenance on our infrastructure, which includes a half-billion dollars for our drinking water; more than 3,000 bridges, estimated by American Society of Civil Engineers, are in need of repair; and just under 100 dams are now rated “high hazard.”

We got lucky again this year when the Biden Administration sent us $1 billion in aid, but all that really did was allow the legislature to kick the can down the alley for another year.

We’ve managed our state finances like teenagers who got hold of Dad’s credit card, spending everyone else’s money but our own. Afterward, we can’t even say thank you. While Wyoming cashes checks funded by taxpayers living in the other 49 states, our state GOP Chairman, Frank Eathorne, floats the possibility of secession and our state legislature mulls the idea of seizing federal land.

Don’t expect sympathy from the rest of the country if we go bankrupt.

To be clear, I’m all for putting aside rugged individualism if it means folks in Illinois or California will pay for our roads, law enforcement and schools. But that gig is over, leaving us with two primary ways to pay for our state services: sales and excise tax, or income tax.

The issue with sales and excise tax is that the burden falls disproportionately on the working class. 

I recently spoke to a single mom from Fort Laramie. Every day she drives over an hour to Scottsbluff, Nebraska for her job. Money is tight. She unscrews many of her lightbulbs to keep her daughter from using too much electricity.

In economic terms, sales and use taxes are considered regressive taxes, because this mother pays a higher tax rate (as compared to her income and wealth) than the owner of the Ferrari that I just saw parked outside an expensive Jackson restaurant.

The second option is an income tax. We are one of nine states with no income tax and have enjoyed that honor not through fiscal conservatism, but because the rest of the country pays for half of our expenses. Unlike sales and use taxes, an income tax is a progressive tax (a mathematical term, not to be confused with the liberal political term).This means that a person’s rate increases as their ability to pay increases. With an income tax, the New York cowboy who owns the Ferrari pays a higher rate than the single mom struggling with her utility bill. To me, that seems fair.

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Some argue that lower taxes help attract businesses to Wyoming. We enjoy the 49th lowest current tax burden in the country. A modest tax will not change our attractive tax position with our neighboring Western states, all of which have a significantly higher tax burden. Meanwhile, they are doing better than us in attracting business, because companies considering our region are also concerned about the state’s fiscal stability — and Wyoming’s is shaky.

For a state that prides itself on independence and self-reliance, we certainly haven’t minded being taken care of by the rest of the country. But that’s over; we need to find other sources of revenue and pay our own way. The question remaining is not whether to raise taxes, but how best to do so.

CORRECTION: This story has been updated to clarify Frank Eathorne floated the idea of secession. -Ed. 

Dave Dodson

David Dodson is a resident of Wyoming and an entrepreneur who has helped create over 20,000 private sector jobs. He is on the faculty of the Stanford Graduate School of Business where he teaches courses...

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  1. When the topic smoking up the the room is Wyoming’s skewed tax system – that this state is reluctant dig into its own pockets to tax itself for essential public services provided by or through the State – a RINOceros in the room is being left out of the discussion. Wyoming is always near the top of the list as a state that receives way more in federal services and benefits than it contributes in total federal taxes, fees, and even mineral royalties. Wyoming takes more than it gives , no matter what parameters you use. Wyoming’s books are balanced by states like New York that pay as much as double their share of taxes for goods and services than received back. In broad strokes, the wealth of the more liberal Blue states subsidize the relative poverty of the Republican Red states. Yet those feisty Wyoming Republicans like Frank Eathorne & Co. snarl and bite the hand that feeds them , and show little gratitude for the welfare the rest of America provides to keep Wyoming on life support with highways, airports , water and power , public health, education , and so many other things we take for granted.

    If we were being blunt about it, the argument could be made that Wyoming is financially a cultural parasite. It’s even worse when you considers that individual Wyoming citizens and/or families personally pay only a small fraction of the cost of goods and services delivered to their door by or through the State of Wyoming. The bulk is paid by minerals and energy and a smattering of other businesses. Some say that tax/benefit differential could be as much as a tenfold difference on a per capita basis. There simply is no practical way that Wyoming people can pay their own way for essential public services by taxing their own personal income under the archaic and hopelessly skewed state tax system as it exists now.

    This is the part where we can say that having no state personal income tax, but trumpeting our ridiculously low corporate and business taxation , along with the denial of shamefully low property taxes that really do not go replenish the state General Fund, are nothing to be proud of. They are negatives, actually . A state cannot exist on Sales Tax alone… especially when that kind of excise taxation falls hardest on lower income folks.

    So we need a reality check. Wyoming is long past the point where we should have started overhauling the entire state tax code … a Reformation. And for the diehard Republicans and delusionists like GOP chairman Frank Eathorne , you need to come out of denial and admit that without the Federal Government providing far more goods and services and most of all about a third of Wyoming’s payroll jobs ( primary or one step removed) than we can provide ourselves, Wyoming would be the worst off state in the nation. Take away the federal contribution to Wyoming’s bottom line, and we are s-o-o-o-o screwed. We would have to go back to being nomadic hunter-gatherers and aboriginal flintknappers should Eathorne get his wish of a seceded autonomous People’s Republic of Wyoming .

    Dodson is on the right track with the themes of his essay here. But we need to totally reframe the debate about Wyomiing version 2.0 and start the reformation. It will be painful , but catharsis works like that. That Cowboy Conservative All Republican All The Time operator’s manual has failed us. Time to reboot.

    1. Agreed.
      While we are willing to discuss revenue we should also talk about a fuel tax.
      I moved from California which has the opposite problem. The one party rule paradigm there has resulted in egregious taxes on everything and everything is dysfunctional.
      Here we support our local services with donations and we approved a tax on the last ballot.
      But what we don’t want is the mentality that harms businesses and prevents economic expansion. We should be encouraging businesses to come to Wyoming from unfriendly places like California. So far Texas and Nevada have taken the initiative and have gained many new business investment opportunities. Each town in Wyoming could support a start-up and gain from it. My two cents.

  2. Dave – all well and good. Everything you say makes sense, is pretty basic stuff and has been well-known for a long time. Thx for reiterating in a way people can understand. However, ain’t nothing gonna change until Wyomingites – and you – address the real problem.

    You keep referring to “we”, and critically, state that “We’ve managed our state finances like teenagers…”. Let’s be clear. The “we” you refer to is one political party. Yours. The Republican Party, which has controlled Wyoming state gov’t (and fed offices) for a generation or two. Lots of other non-Republicans have long recognized the issues you raised and warned about inaction and rigid ideology. Your party, supposedly the party of personal responsibility, is the one comfortable with others footing our bills.

    In a two party system and one-party state, its incumbent on those who want to solve tough issues to clearly state where responsibility lies. Otherwise, nothing will change. I know its not easy when your party supports litmus tests for loyalty, but change only happens when the public is truly educated on why change is needed.

    As for those talking about cutting spending as the only alternative, I’d love to here where specifically they want to cut when we’ve already cut so deeply. Perhaps, in the spirit of rugged independence, we should voluntarily refuse all federal support, which accounts for nearly 50% of Wyoming’s state budget. That would stick it to those folks who think gov’t should be a force for improving the “General Welfare” of the people as stated in the Constitution (snark intended).

  3. Funny, coming from someone like Dodson with his background there was no mention of state government spending, such as our overbloated school system. I guess in his small business classes he teaches that rather than looking at managing operating costs just raise your prices because people are “willing” to pay.? Probably not. People will just start going to a better-managed business. Government is a business and people do go somewhere else, hence to population shifts to Wyoming. His solution is the typical leftist tax the rich (guy with Ferrari) type of solution. Really Dave? No one word about spending?

  4. The main rational behind exporting out taxes is to raise the funds for publicly supported infrastructure needed to support an influx of workers into Wyoming. When we applied for the mining permit for the Eagle Butte Mine in the late 1970s Amax Coal Co. was required to provide a construction camp trailer park for the construction workers who would be building the mine and acreage for a school. The County Commissioners can even require the companies to PREPAY for the impact on communities.
    It is unrealistic to ask the existing citizenry of Wyoming to foot the bill for hundreds of millions in new infrastructure required for coal mining, oil and gas development, trona and uranium. How can 450,000 people pay for developments which result in about 17% of the nations energy needs and benefits tens of millions out of state consumers???
    Wyoming needed new schools, hospitals, municipal water and sewage plants, highways, libraries, rec centers, performing arts centers, law enforcement facilities, court house expansion, jails, fair grounds, etc. Somehow, these costs of industrial development needed to be passed on to the consumers. No way Wyoming farm and ranches could fund industrial development.
    Do you remember when the State of Wyoming paid for about 13 new high schools in Wyoming – we got a new high school in Thermopolis. And how about the millions in improvements at our State universities. And the Wyoming Wildlife Trust Fund and rainy day account??
    The citizenry of Wyoming has been willing and able to meet the challenge of supplying more than our share of the nations natural resource needs and its taken a toll on the environment and wildlife. Compensation in the form of severance taxes and ad valorum taxes has been just and well deserved.

  5. Someone who likes math needs to come up with more than one formula to help off-set the budget deficit. Many Wyoming citizens hate the idea of medicaid and welfare in any form yet living off the natural resource revenue without paying back seems like a contradiction of sorts. Confusing who are we?

    1. Whoosh ! there’s the hue and cry to ” spend less” again…

      The Legislature and the Governor have been cutting sharply and deeply for years. They’re down past the fat into the muscle and hacking bone in some places. Amputation is next and we pray that gangrene doesn’t set in.

      Where would YOU cut , Chuck ? Please be specific and itemize your proposed spending cuts for us all to review. Waddya got ?