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Monday, December 2, 2019

Tax Hikers Don't Even Fear Job Losses

One of the most influential lawmakers in Wyoming admits that he will raise taxes even if businesses are laying off people in droves. 

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There is the idea floating around that the legislative leadership in Wyoming may wake up one day and realize how bad an idea it is to raise taxes. This mindset seems to be an excuse that many people use to not have to get involved in stopping the Taxmageddon that our state is faced with. 

Let me assure all of you: the tax-hikers on the Revenue Committee are already as awake as they can be. They want the corporate income tax and every other tax they can push, and they want them as badly as anyone has ever wanted higher taxes. 

If you are still in doubt, let me give you an insight into how they think. Are you sitting down?

Someone sent me an article from the Cowboy State Daily (CSD) with the question: "Does this mean the Revenue Committee leadership is realizing what the economy really looks like? Maybe they will back off from raising taxes."

In the article, the chairs of the Joint Revenue Committee, Senator Cale Case and Representative Dan Zwonitzer, lament how minerals-based tax revenue is plummeting and won't come back. 

I can see how you can get the impression that they have just woken up and had an oh-my-God moment. But don't be fooled. Their comments on the state's revenue outlook are well calculated and serve a broader, carefully laid out purpose: to get tax hikes passed - no matter what.

As coal, oil and natural gas revenues decline, state legislators could have some hard decisions ahead, according to information generated by a strategic planning effort created by Gov. Mark Gordon. Dubbed “Power Wyoming,” the planning effort forecasts several scenarios for mineral-based state revenue streams during the next five years, all of which predict a deficit in coming years. 
The commitment to higher taxes is now shared by the executive branch. I have already explained how Governor Gordon is inviting the legislature to create a corporate income tax. This shows how well coordinated the effort is to raise your taxes.

And don't think for a moment that a corporate income tax will stay within the limits defined in the bill the Revenue Committee has passed. It will grow and expand and eventually apply to your paycheck as well. And they will get there; as we will see in a moment, the champions of higher taxes do not even fear the loss of 20,000 jobs in our state. On the contrary, that scenario even makes them more determined to raise taxes.

More on that in a second. First, a reminder of how the corporate income tax paves the way for a personal income tax.

Technically, Gordon doesn't have to approve it this time around - in a budget session the legislature needs to pass it with a veto-proof majority anyway - but it is going to take a governor's signature to make even the slightest changes to the tax once it is in place. Such changes include removing the 100-shareholder threshold for whom the tax applies to. It is, namely, as safe a bet as another sunrise that once the corporate income tax is in place, it will expand to smaller incorporated businesses.

And - since many small businesses file under the personal income tax - it will be followed by a personal income tax. Some people continue to deny that the corporate-income tax bill cannot create an income tax; they are wrong, plain and simple. The taxpayer is defined in the corporate-tax bill by his tax filing status. All the legislature has to do is add the 1040 IRS filing status to the bill, and the personal income tax is in place. This can be done by a simple majority vote in, say, the 2021 general session; at that time Governor Gordon can sign it on the same pretext that he has now opened the door for the corporate income tax itself.

The motivation for the personal income tax would be twofold: it "levels the playing field" between incorporated and non-incorporated businesses, and it provides revenue for some program that absolutely, positively, not-in-a-million-years could ever be cared for by the private sector. 

Before we get back to the CSD article, let me mention that I predicted three years ago precisely how the income tax would come to Wyoming. I predicted that it would first be introduced on the corporate side, then expand to the individual side. 

To quote a sinister Star Wars character: everything is proceeding as I have foreseen.

Anyway. Here is the Cowboy State Daily again:
The information compiled by Power Wyoming was presented to the Wyoming Legislature’s Joint Revenue Committee on Nov. 11. “The best projections in this model are very unlikely, and the worst are the most likely,” said Sen. Cale Case, R-Lander, the Senate committee’s chair. “That’s very scary.” ... Rep. Dan Zwonitzer, R-Cheyenne, chairman of the House Revenue Committee ... said the planning effort is the starting point to prepare for diminishing mineral revenues. “Power Wyoming is just the first step of saying, ‘Here’s what’s going to happen to Wyoming,’” he said. “The group was formed to get the message out there: ’It’s real, and it’s bad.’”
It is complete nonsense that they haven't seen this coming. They have known for years that minerals-based revenue could not sustain our big government. This is why you have heard about a funding crisis in education for three years now - it has been a tactic to shame you into accepting higher taxes. That hasn't played out as they hoped it would, which is why Governor Gordon in his budget shifted focus to mental-health spending. 

But why, then, do Cale Case and Dan Zwonitzer talk about revenue in such stunned, scared and aghast words?

Simple. They want you to be shocked, stunned, scared and frightened, too. They want you to feel that "oh, my God, we didn't see this happening either!" They want you (who obviously do not read any blogs that tell you what is really going on...) to imagine before you a chasm opening up, into which your children will fall as they walk into unfunded, crumbling schools. They want you to fear that your local hospital is going to close tomorrow (did you know our local governments spend a billion dollars a year on hospitals?) and that your roads are going to break apart so you can't drive to Aunt Mable for Christmas.

Once they have gotten you into this scare mode, you will be ripe and ready to call your senator and your representative and beg, on your knees, tears flowing down your cheeks, that they please take more of your hard-earned money, right now. 

They do not expect you to call them and tell them that you can't afford higher taxes.

The CSD again:
While the coal industry’s struggles are being felt across the state, [Senator] Case said Power Wyoming illuminated potential problems with the natural gas sector as well. “I did not realize the issues with natural gas were as serious as they are,” he said. “Everybody else is thinking natural gas is doing great, and it’s not.” 
Senator Case, a Wyoming Liberty Group board member, is a Ph.D. economist. He knows how to find and read information about natural-gas production and prices. An intelligent man like him would never go through his tenure on the Revenue Committee and, subsequently, as Senate Chairman of the Joint Revenue Committee with a thick blindfold over his eyes. Not a chance.

He has known full well all the way what the situation is like. 

And now for the scariest part of this: the tax hikers don't even balk at raising taxes on an economy hemorrhaging jobs. The CSD piece actually addresses the macroeconomic outlook for our state - and pay close attention to what Chairman Zwonitzer says in response to the prediction of job losses: 
Most scenarios predicted a decrease in both Wyoming’s total employment and population, but in the worst case scenarios, the state’s total employment could decrease by about 20,000 jobs by 2024, followed by a similar decrease in population. “In the next five years, there’s no way to absorb those (lost) jobs,” Zwonitzer said. “That means we’ll either have to have an increase in taxes, or a decrease in government services.” In the worst case scenarios, he said the state would most likely need to pursue both. 
The 20,000 number is not out of the realm. In 2015-2017 we lost more than 17,000 private-sector jobs; thanks exclusively to the Trump economy we have recovered about half of those jobs. But the bigger point here is that Chairman Zwonitzer does not show any effort at understanding what higher taxes do to an economy. 

He actually believes that you can stop the hemorrhaging of jobs by raising taxes on job creators. 

This, folks, tells you a great deal of the mindset that has engulfed the majority of the members of the Revenue Committee. The chairmen, both Senator Case and Representative Zwonitzer, are hell bent on raising taxes. They are willing to do so even when faced with an outlook where the state loses massive amounts of jobs. 

This is how serious the fight is for our state's survival. It is going to take a Herculean effort to stop this madness. Nobody can be on the sidelines here. Commenting on social media is good, but it is not going to stop these tax hikes. 

Only an active response from Wyoming taxpayers will do the job. What will you do?

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