Taxed in the USA: Creeping Sales Tax Hike in Wyoming

This blog has reported on numerous occasions (see, e.g., here, here and here) about the creeping rise in state and local taxes around the country. Today we add Wyoming to this list. A bill currently being considered in the state legislature will permit counties to add a sixth sales penny tax for the purpose of street and highway maintenance, From the Casper Star Tribune:

The Wyoming Senate on Thursday approved for the second time a bill that allows voters to decide whether to impose a sixth-penny sales tax for road and street maintenance. The bill comes up for third and final vote in the Senate today. It previously passed the House. The Senate changed the bill Thursday to allow one-time major maintenance, renovation or reconstruction of a specifically defined section of public roadway not included in regular county operations. The tax would end when the specified amount of money has been collected. Sen. Curt Meier, R-LaGrange, said the amendment would allow small towns to fix their streets. Sen. Drew Perkins, R-Casper, said the amendment is contrary to the intent of the bill. “This is a significant policy change for the capital facilities tax,” Perkins said. To get the capital facilities tax on the ballot, the governing bodies in a county must approve the proposal.

The bill is seemingly inconspicuous. All it does is broaden the use of the sales tax for defined roadway maintenance and construction projects. What this means, though, is that those counties that choose to go for the higher taxes will effectively make that higher tax rate permanent. It is always easy to identify single projects of highway maintenance and construction that could be paid for with this tax.

What we have here is yet another example of a creeping increase in the permanent cost of government. If the bill set a specific date for when this sixth penny would sunset, it would be certain that there would not be an ongoing series of highway projects lining up to keep the revenues coming. But there is no sunset date in this bill. Instead, the bill caps the amount to be collected, which is coupled with an almost deliberate vagueness in the language on what projects the money can be used for. It is very easy for legislators to present to voters a list of projects similar to those that were paid for under the higher tax, that would merit an increase in the amount that can be collected under the tax.

To put this tax increase in perspective: if all counties in Wyoming adopted this higher tax, the economic repercussions would be felt immediataely. According to a macroeconomic model used by Wyoming Liberty Group for economic policy simulations, a sixth sales tax penny statewide would reduce consumer spending to such a degree that the private sector would lose 2,400 jobs in the first year. If the tax is kept in place for four years the total loss, compared to no change in the sales tax, would exceed 6,000 private sector jobs per year.

There are other ways to fund highway maintenance. One is to pull government out of its non-essential functions and concentrate its spending on essential programs. This would lead to a reduction in government spending and open up for more funds toward streets, highways and other infrastructure projects. Wyoming has the largest state and local government bureaucracies – measured as the rate of state and local government workers to private sector workers – in the country. In other words, there is plenty of room here for government shrinkage.