In Fiscal Year (FY) 2013, Wyoming collected $3.5 billion in state and local taxes. While this is an impressive sum of money, it tells us little about whether or not the average Wyoming taxpayer can afford this level of taxation.
As shown in Chart 1, Wyoming’s state and local tax burden (tax collections divided by personal income) was the tenth highest in the nation for FY 2013 at 11.4 percent—this is 10 percent above the national average of 10.3 percent. As shown in Chart 2, due to the rise in severance taxes, Wyoming’s tax burden has grown tremendously over time by 66 percent to 11.4 percent in FY 2013 from 6.8 percent in FY 1950.
However, If all other taxes, such as severance taxes, were excluded from Wyoming’s tax burden then Wyoming would rank as the lowest tax burden in the country at 7.3 percent. This low ranking stems from the fact that Wyoming does not have a state individual or corporate income tax.
Wyoming severance taxes on oil, gas, and coal also fuels their Permanent Wyoming Mineral Trust Fund (pdf) enshrined in their constitution in 1975. According to the Wyoming Taxpayers Association, the Fund has paid $3.2 billion into the state’s general fund between 1975 and 2012. Unlike Alaska which pays taxpayers directly from their Fund, Wyoming is using the proceeds from their Fund to keep other taxes low—North Dakota should take note as they launch their Legacy Fund.
Additionally, as noted above, much of the severance tax burden is actually “exported” to the other 49 states. The tax burden analysis published by the Tax Foundation adjusts for this impact and ranks Wyoming as the lowest in the country with a tax burden of 6.9 percent.
Overall, Wyoming’s tenth highest in the nation tax burden needs to be put into proper context due to the high tax collections from their severance tax. Wyoming’s true tax burden on the average taxpayer is much, much lighter.
Of course, the tax burdens for local government can vary just as much as they do among the 50 states. As such, we have also calculated the local government tax burden for every county in Wyoming—this includes every taxing jurisdiction within the geographic county borders whether it is a city, a special district, or county government itself.
The Wyoming counties with the highest local government tax burden include: Sublette County, WY (14.6 percent), Johnson County, WY (11.5 percent), and Campbell County, WY (9.2 percent). The Wyoming counties with the lowest local government tax burden include: Goshen County, WY (1.9 percent), Laramie County, WY (2.1 percent), and Albany County, WY (2.3 percent).
J. Scott Moody has over 18 years as a public policy economist with a specialty in tax policy and has over 180 publications. He has worked for numerous national and state-based think tanks such as Federalism In Action, Tax Foundation, Heritage Foundation, and The Maine Heritage Policy Center.