CHEYENNE – A revised version of the corporate income tax bill that failed last spring was approved last week by the Wyoming Legislature’s Joint Revenue Interim Committee, but some local leaders have concerns about the legislation.
While last session’s bill applied only to retailers, restaurants and hotels with more than 100 stakeholders, the new legislation would impose a 7% tax on all businesses that meet the stakeholder threshold. Revenue from that tax would be used to fund K-12 education.
Rep. Dan Zwonitzer, R-Cheyenne, who was among the nine committee members in favor of the bill, said the new version is more fair and equitable.
“There was a lot of pushback last year from certain sectors, the hospitality industry and restaurants especially, that they were being unfairly targeted. So now we’ve just expanded it across the board and taken away some of those complaints,” said Zwonitzer, who co-chairs the joint committee.
The bill, sponsored by Rep. Jerry Obermueller, R-Casper, could look different when the legislative session starts in February. Zwonitzer noted there are still some issues with the shareholder requirement, as some large companies have single-shareholder structure or private ownership, meaning they would be exempt under the proposed legislation.
“I think you’ll see a push in the House committee to take the 100 shareholders out and make it an income threshold with a multilayered approach,” Zwonitzer said.
While local leaders don’t have a vote, some in Cheyenne are lining up in opposition to the bill. Dale Steenbergen, CEO of the Greater Cheyenne Chamber of Commerce, said his group was adamantly opposed to last session’s bill.
“I would expect that without significant changes that we will continue to oppose this,” Steenbergen said. “From what I saw last year, I think they’ve got a large uphill battle to get anything done with it. There was a lot of opposition.”
Steenbergen was concerned that passing a corporate income tax would “open Pandora’s Box” for other income taxes in the state.
“The lack of corporate income tax has really been a calling card for Wyoming, and we struggle to compete with other states to recruit business,” he said. “It is one of the benefits over a lot of states that we can offer, and now all of a sudden we’re in a hurry to get rid of it.”
Wyoming is one of only two states that don’t have some form of corporate taxation. Randy Bruns, CEO of Cheyenne LEADS, the economic development organization for Cheyenne and Laramie County, said the absence of a corporate income tax is just one of many factors companies consider when deciding whether to come to Wyoming.
“It all depends on the business,” said Bruns, adding his organization has no official position on the legislation.
Cheyenne Mayor Marian Orr said she opposes the bill, sharing Steenbergen’s concerns that it could lead to additional taxes. She said she would like to see data showing the state is doing enough to cut expenditures before approving a new tax.
“Times are tight in Wyoming, so we need to take a hard look at the services we provide and if they’re critical,” Orr said, adding the tax could have a negative effect on wages and benefits for workers.
A report from the Wyoming Department of Revenue projected the tax would produce $23.1 million in revenue in its first year, while administrative costs were estimated at $5.6 million the first year and about $1.6 million each following year.
When the 2020 legislative session starts in February, the bill must gain initial approval from two-thirds of the House to be referred to a House committee. That’s because it’s a budget session, and the two-thirds rule applies to all non-budget bills.
“That’s a big lift, so we’ll just have to see,” Sen. Cale Case, R-Lander, said of the introductory vote. “If it doesn’t pass, it might be back (the) next year. That’s the way things go.”