Corporate tax next big battle for Wyo. Legislature

Obermueller has said during testimony and in interviews the bill was written primarily to focus on large, out-of-state corporations.

HB 220 has already passed out of the House on a 44-14 vote and now sits in the Senate Corporations, Elections and Political Subdivisions Committee. Two of the bill’s co-sponsors, Sens. Tara Nethercott, R-Cheyenne, and Cale Case, R-Lander, sit on the committee.

Any revenue generated by the tax would go to education funding. The fiscal note estimated the tax could raise about $45 million annually, but Wyoming Department of Revenue Director Dan Noble said Thursday during a hearing the true amount of revenue that would be generated by the tax is anyone’s guess because of so many variables at play, including the tax credits.

The bill has the backing of leadership in both chambers, and many consider it to be one of the key elements of the Legislature’s push to diversify and expand the state’s tax base. While the idea of any form of a state income tax is pretty appalling to most Republicans in the Legislature, HB 220 seems to strike the right chord among lawmakers because of who gets impacted and how.

Supporters say Wyomingites are already paying the taxes included in HB 220. The argument goes that large box retail stores, like Walmart and Target, price their products the same, no matter where the store is located. So people in Wyoming pay the same for an item as those in a high-tax state like New York.

If the prices in Wyoming were decreased to reflect the low tax burden on these companies, then residents would benefit from the low tax statute when shopping. But now Wyoming is paying higher prices to help make up for those higher taxes in other states.

Senate President Drew Perkins, R-Casper, said Friday that HB 220 was about recognizing the new reality of business in Wyoming. For too long, he said, Wyoming has been treated like a colony, where raw materials are taken out of state, instead of being used for products here.

“Does a national chain that’s in New York state pay more in taxes than they do in Wyoming? The answer, of course, is yes,” Perkins said. “And yet a TV, a cup of coffee, electronics, those things in a lot of national chains will cost you the exact same in New York as in Wyoming as in California as in Iowa.”

Speaker of the House Steve Harshman, R-Casper, said the retail, restaurant and hospitality sectors have changed significantly in Wyoming in the past 20 years. And the state needs to re-examine how it taxes those new players in a fair way that helps fund the state’s services.

“There’s a whole different presence in the state,” Harshman said. “I think the 100 shareholders is a key piece in the bill for me. It’s a key demarcation in federal tax statute. It’s not just a number that’s chosen out of the air.

“At some point, you have to examine how you pay your bills.”

But opponents, including large retailers, restaurant and hotel chains, see HB 220 as an unfair attack against a certain section of the business community. They claim the bill will drastically hurt revenue to a degree that some stores may close, and plans for new stories may be scrapped.

For several hours during the Senate Corporations Committee meeting Thursday, dozens of industry representatives and others just opposed to any form of tax increase made their concerns known. Several national groups also made the trip to Cheyenne for Thursday’s meeting, including Americans for Tax Reform and the Council on State Taxation.

A representative from Walmart said during testimony the bill discriminates against the company and would cause the company to have to cut hours for employees. And Chris Brown, representing the Wyoming Lodging and Restaurant Association and the Wyoming Retail Association, said the bill created a double standard.

“One of our biggest issues with this bill, as has already been clearly illustrated, what I believe is an unintended consequence in the disparity within the industries I represent that this bill creates,” Brown said. “There’s more than one corporate restaurant on Dell Range (Boulevard in Cheyenne) where one of the restaurant companies would be subject to this tax and one of them would not.”

Not every member of the Legislature is in favor of the bill, and several lawmakers expressed major reservations about the bill being the first step in a statewide income tax being placed on businesses and residents.

Corporations Committee Chairman Bill Landen, R-Casper, said he was torn about the bill and didn’t know how he would vote when the committee votes Tuesday on HB 220. But he did point out that when it came to supporting the community, whether it be sponsoring Little League baseball teams or the local stadium, it was the main street businesses that always seem to step up.

“They were the ones who put the signs in the gymnasium where I worked,” Landen said.

“There was always a noticeable lack of support, it seemed to me, from a lot of those outside entities.”