Emerging Opposition to Tax Hikes


Our voices against higher taxes are still way too few, too weak and too modest. We need to speak up more, spread the word farther and formulate even better arguments. 

But there is a faint light of hope here and there. Take them not as signs of victory, but as encouragements to double your efforts. Behold an article in the Casper Star Tribune by Chris Boswell, former gubernatorial chief of staff and vice president of the University of Wyoming:
Incoming governor Mark Gordon may have it right when he says this is not the time to talk about tax increases in Wyoming. Even though the Legislature is rarely serious about generating the consensus required to raise taxes, the possibility does exist and bills are in the hopper for the 2019 session. 
Yes, and I sense a determination in the Revenue Committee that I did not see last year. The same is true for the legislative leadership. After last year's failure, they will do everything and anything they need to. Last year, the $475-million Taxmageddon package died in the Revenue Committee right at the start of the legislative session. This time, they are not going to let that happen. 

So far, Boswell is right on the money. Your tax money. But then he falls for the same temptation as so many others before him:
Legislators and the governor should give serious thought to putting the brakes on such proposals until there is a vehicle to provide a sober look at the shaping of the state’s economy going forward. Bigger picture deliberations could offer the opportunity to examine the intricacies of interweaving tax policies with economic development trials. 
What economic-development projects here in Wyoming have generated enough tax revenue to repay taxpayers for the initial investment? I have asked this question multiple times over the past few years, and I am still waiting for an answer. 

There is a simple reason why: economic development does not pay for itself. It is really nothing more than what its critics call it: corporate welfare. Throwing money after profitable businesses increases our state's budget problems, and it crowds out market-based venture capital efforts.

Want to grow our economy? Get politics out of it. Trust the private sector. 

That said, Boswell's skepticism to higher taxes is well taken. Let's listen in some more to what he has to say:
Gordon’s “not now” view on tax increases puts our next governor in conflict with elements of the Wyoming Legislature, which, for the second year in a row, tasked the Joint Revenue Committee with developing multiple tax increase proposals, which may or may not have a chance of becoming law during the 2019 session. A bill which raises the property tax on your home, ranch or business received the committee’s support in November, as did a bill which would reimpose the sales tax on groceries. 
Exactly my point. There are influential people in the legislature who would love to raise your taxes. They think it will allow them to continue to spend as if there were no macroeconomic problems out there. To the extent they recognize those problems, they want to restructure our tax system so that government does not have to experience the ups and downs in the business cycle that taxpayers go through. 

Boswell touches on this issue:
Absent yet again from this year’s legislative deliberations is a rational discussion of just what it is that the state seeks to accomplish via changes to Wyoming’s tax laws, other than the possibility of raising money. Legislators and the governor would do well to pause before rolling the dice on one or more tax proposals which have a once-a-decade likelihood of success. 
This is a good point. Even though Boswell is not willing to talk structural spending cuts, he does bring up the one aspect on tax hikes that most legislators seem to ignore: what is the long-term plan here?

As I explained back on December 1, the idea that government can shield its tax revenue from the business cycle is a pipe dream. Wishful thinking. Flawed economics. It is time our legislators realize this before they go into the 2019 session and start messing things up. 

So far, the debate over the relation between government and the private sector has been centered on government, not the private sector. Boswell does not quite see it this way, but he notes the nature of the conversation:
Departing Governor Matt Mead’s Endow economic diversification report noted an overarching problem for the health of the state’s economy going forward: How to deal with the seeming inevitability of declining mineral revenue coupled with an unsustainable fiscal model, 
So far so good. Then he squanders a good argument by bringing up the conventional fairy tale:
where a typical Wyoming family of three pays $3,050 in taxes while receiving $28,750 in public services. Adding a second or third child only widens that deficit. 
No, no, a thousand times NO. This is nothing but statistical malpractice. If this were true, we'd be running 85-90 percent deficits every year. 

I have debunked these numbers on many occasions - here is my latest contribution. Spread the word. 

Then Boswell gets back to ENDOW, quoting it as hoping to attract "upward of 100,000 new jobs to Wyoming in the next twenty years". He also makes a good point that ENDOW does not seek to address the state's tax system, but that is also not the point with ENDOW. Its hopeful supporters think that by spending truck loads of economic development money - or plane loads, since their hallmark project is a state-run airline - they will expand the tax base and get all the money back.

There is not a single analysis available, anywhere, that comes even close to explaining how this will happen. 

Boswell, again, sees this problem, although he does it through the false prism of the "funding gap". Anyway, his note about ENDOW is a welcome contribution. Our state lawmakers need to stop thinking that higher taxes and more corporate welfare is the only way to a more prosperous future for Wyoming.

Underneath this conventional wisdom lies, again, the idea that the relationship between government and the private sector is solely defined by government. It is as though many of our elected officials think that government should - and can - define the size of the private sector. It is precisely the other way around: the private sector should define the size of government.  

Boswell, again, touches on the gist of this issue:
In this day and age, the state enthusiastically dedicates millions of dollars in economic development grants and loans to companies seeking an escape from their current homes. We rightly welcome the recruitment of Weatherby workers and their families to Sheridan or those of Magpul to Cheyenne, but we do so without a discussion how to make those economic development efforts pencil out over the long term. Folks know the need to have that discussion, but evidence of movement is absent. Without a coherent strategy to address a complex problem, the legislature’s current “see what we can get” mindset regarding both new jobs and new revenues encourages a process which engages the spaghetti approach to taxation — throw ideas against the wall and see what sticks, while deflecting a discussion of how best to match problems with solutions. 
Good point, but it is even worse than that. The prevailing strategy is to circle the wagons around government spending and hope that the ebb and flow of tax revenue will soon turn to their favor again. 

As an example of the lack of long-term thinking, Boswell mentions the property-tax bill that the Revenue Committee passed, which
would increase property taxes by 13 percent on residential, agricultural and industrial property in order to cover a portion of the state’s K-12 school funding shortfall. The prospect for legislation carrying such a shocking increase to the property tax notice which you and I receive every fall is rightfully dim. 
It is less dim this year than last. Since the last session, the tax hikers have gone all out to secure their victory this year. (Trust me, I have been on the receiving end of their efforts on more than one occasion...) They really do believe they can get a bill like this through the legislature. Keep in mind that unlike the last session, this time they just came off an election. As they see it, voters have short memories and long checkbooks. 

Boswell's article in the Casper Star Tribune is a welcome contribution, primarily because he criticizes the legislators for being short-sighted and for lacking a consistent fiscal-policy strategy. He also cautions against tax hikes, which - despite his factual errors - is an important point in itself. 

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