Miller: The solution is a state income tax (but…)

A leading state lawmaker told the Wyoming Legislature’s Joint Revenue Committee last week that the answer to reforming Wyoming’s tax code is simple: Wyoming should join the vast majority of American states and implement an income tax.

“It’s clear as a bell that, if you want to diversify the tax base, we need a state income tax,” Rep. David Miller (R-Riverton) told his colleagues.

But, like most Wyoming legislators, Miller said he also opposes this commonsense solution.

“I, for one, do not advocate a state income tax,” Miller continued. “I enjoy the mineral industry paying all the bills.”

Miller’s recipe for success resembles the Legislature’s overall approach to tax reform: recognize a problem, identify a solution, and then refuse to implement that solution because you’re accustomed to receiving a free ride.

 

 

Miller’s freeloading mentality

The problem with Miller’s approach, of course, is that the mineral industry has for several years now—just like during every bust—failed miserably at paying Wyoming’s bills.

Downturns in Wyoming’s mining industries have resulted in an ongoing budget crisis. The Legislature recently passed the smallest state budget in 15 years, it has cut more than $100 million from public school funding, and it has stripped funding for other critical public services and infrastructure. Nevertheless, Wyoming still faces a “structural deficit” of hundreds of millions of dollars.

Without tax reform, diversifying Wyoming’s economy beyond its dependence on minerals would actually hurt the state.

But instead of raising new revenues, lawmakers like Miller insist that Wyoming continue to rely on the mineral industries, because they like getting public services without paying for them.

Former Wyoming Governor Stan Hathaway, who played a big role during the 1960s and 70s in making Wyoming dependent on mineral revenues, later told journalist Sam Western that he regretted it, because it encouraged the kind of freeloading mentality that Miller promotes.

“I passed the first [mineral] severance tax, I got the Permanent Mineral Trust Fund, and they’ve carried Wyoming’s expenses very well,” Hathaway said. “But it bothers me that we’ve created something that the majority of people in Wyoming said, ‘My god, this is a free ride.’ The truth is, we should all pay our share of governmental costs.”

Want economic diversification? Then support tax reform.

At the Revenue Committee meeting, a national consultant told lawmakers that diversifying Wyoming’s tax structure is critical to another effort: diversifying Wyoming’s economy.

The economist explained that, without tax reform, diversifying Wyoming’s economy beyond its dependence on minerals would actually hurt the state.

Creating new jobs that attract people to Wyoming would increase the burden on our schools, roads, and other public services, he said. But there would be no mechanism to collect revenue from these new residents—such as an income tax—so our already distressed public infrastructure would face further strain.

This is problematic for Gov. Matt Mead and other top state lawmakers who have made economic diversification a focus. Mead, whose signature policy effort lately has been leading the launch of the ENDOW initiative, agreed that Wyoming needs tax reform to go along with diversification.

Watch Miller’s speech to the Revenue Committee (video: Wyoming PBS)

Mining, mining, and more mining

Miller’s plan for the future, however, does not involve diversifying Wyoming’s economy, nor its tax base.

We can continue to depend on mining, he said—we just need to mine a whole lot more.

Miller told the Revenue Committee that, beyond Wyoming’s current mining products—coal, oil, gas, uranium, trona—there are plenty of other elements we can dig up from the ground, and we can tax their production.

“Frankly, there are many, many other minerals that aren’t being produced out there that we’re not doing anything to encourage,” he said.

Alternative facts

Miller’s plan would not only keep Wyoming shackled to the booms and busts of mineral dependence, its facts also don’t add up.

Where else but the in the Wyoming State Legislature does one get away with recognizing a solution, refusing that solution, and then offering up nonsense and non-solutions instead?

The two examples he provided the committee of potential new mining products—lithium and rare earth—are both economically unpromising. And, in fact, the Legislature has attempted to encourage them both, and failed.

Miller cited a 2014 University of Wyoming study that said there was potentially hundreds of billions of dollars worth of lithium in the state. But each subsequent study—including one commissioned by the Legislature—has found that lithium deposits here are too low-density to be extracted at a competitive price.

Miller also claimed that “federal regulations” kept Wyoming from developing a rare earth mining industry. But in 2016, after the U.S. Forest Service had approved its permit, a rare earth extraction company canceled plans to mine in Wyoming because of shoddy market prices. This was despite the Legislature’s granting $700,000 for research to help the project along.

“Again, the solution is a state income tax”

Miller concluded his speech to the Revenue Committee: “Again, the solution is a state income tax. But that’s not something I’m advocating for.”

Where else but the in the Wyoming State Legislature does one get away with recognizing a clear solution, refusing that solution, and then offering up a stream of nonsense and non-solutions instead? Does that fly at Miller’s job, where he’s a geologist for mining companies?

We doubt it. That’s because there would be other geologists in line to take Miller’s place. But in his 17 years in the Legislature, Miller has run largely unopposed, and he’s run completely unopposed since 2012. In fact, he’s in line to become Speaker of the House next year.

But a politician can’t offer non-solutions and alternative facts forever. Nor will hard-working Wyomingites long abide an open freeloader unwilling to pay his fair share.

As Miller and his cohort lead the state deeper and deeper into financial crisis by refusing tax reform, eventually Wyoming will wake up, see through Miller’s smug rhetoric, and realize he’s at least half right: The solution is a state income tax.

Rep. David Miller knows a state income tax would largely solve Wyoming's revenue problems. But he'd rather shackle the state even more securely to boom-and-bust mining industries.