PINEDALE — Preparing to vote on legislation that would enact a corporate income tax in Wyoming, the Joint Committee on Revenue on Thursday found itself missing two members and with two choices to make.
There was the option to advance an imperfect bill to its next meeting and work out its blemishes there, or to vote on the bill as it was, leaving it to its creator, Rep. Jerry Obermueller, R-Casper, to work out the kinks in time for the 2020 budget session in January.
They chose the latter, passing the controversial piece of legislation by a 9-4 margin, with two members excused.
Divisive since it was first passed out of the House of Representatives this winter in a landslide vote, Obermueller’s bill — a 7% corporate income tax imposed on corporations with more than 100 shareholders — has been the focus of intense scrutiny from national groups like the Heartland Institute and the Tax Foundation, which considered the bill flawed. Lawmakers defeated a version of the tax during the last general legislative session.
Obermueller returned to the Revenue Committee this week with a revised version of the bill — assisted by a senior researcher with the Tax Foundation, Jared Walczak — that passed muster with most members of the committee. However, the bill still carries with it a provision many in the committee, and numerous opponents of the bill, consider to be unfair and, potentially, unconstitutional: the 100-shareholder threshold.
Though it’s not likely to raise much money — just $23.1 million per year at a tax rate of 7%, according to an updated Sept. 12 memo from the Wyoming Department of Revenue — the bill accomplishes something Wyoming has been trying to accomplish for years: diversify the state’s revenue streams in a way that imposes little punishment on residents.
“We live in a global economy now, said Obermueller. “This is not a slam on companies like Walmart: In 2018, that corporation did $514 billion in business. If the state of Wyoming was a subsidiary of Walmart — if I were auditing Wyoming as a company — Wyoming would be immaterial to the company. This is the scale we’re working with.”
For Obermueller, the 100-shareholder number helps accomplish what he wants out of the bill: the creation of a mechanism to tax publicly traded “big box” stores — like Walmart — in a way that does not punish successful, privately-owned businesses in-state. However, Walczak noted that this approach to taxation is highly unconventional, with no states operating under a similar model.
By Nick Reynolds
Casper Star-Tribune Via Wyoming News Exchange