By Jim Neiman, Neiman Enterprises
It is no secret that Wyoming is in the midst of a difficult financial crisis. It seems that every day we open the paper and read about additional layoffs, more budget shortfalls for our state and local governments, and more negative news about the status of our economy. When over 70% of the state revenue comes from the natural resource sector, falling commodity prices hit all of us hard. Faced with these difficult times, it is more important now than ever that Wyoming promote policies and tax structures that allow our existing businesses to compete and provide good paying jobs in Wyoming.
If Wyoming is serious about diversifying its economy and providing some protection from the boom and bust cycles of our energy industries, it should look to the manufacturing sector. For the last decade, growth of manufacturing as a percentage of state GDP has consistently outpaced other economic sectors and manufacturing industries have continued to grow at a faster pace than the overall private sector economy. This growth is in large part attributable to Wyoming’s tax structure that put Wyoming on at least an even playing field with neighboring states. This tax structure allowed capital investment to be deployed in Wyoming and allowed us to be competitive with Colorado, Utah, South Dakota and other states. By growing the manufacturing sector, Wyoming is in a better position today than it would have otherwise been had it not decided to compete with the other states for this business.
Key to the recent success of the manufacturing sector is the reduction in taxes applied to capital expenditures and equipment purchases necessary for the manufacturing process. Starting in 2004, Wyoming made the decision that it would match the tax policies in 37 other states, including all of our neighboring states and eliminate sales tax on those investments for productive capacity in Wyoming. All investment of any type of capital will be directed to locations where it can get the greatest return on that investment. By matching the tax policies of other states, Wyoming placed itself on an even playing field with those states. Manufacturing companies can invest in Wyoming knowing they will no longer suffer from a tax disadvantage . And, as they say, the proof is in the pudding. These tax policies have worked. Investment is coming to Wyoming. This means more jobs for Wyoming families and in the end means more income to our state and local governments.
As Wyoming faces its budget shortfall, many are looking for ways to increase revenue for the state and local governments. One proposal has been to increase taxes on manufacturing and specifically to increase taxes on capital investments for manufacturing. Increasing taxes on business at this time is the exact wrong approach. If Wyoming is no longer competitive with other states, that investment and most importantly the jobs associated with that investment will go to other states. Now is the time to support our industries and help grow and diversify our economy. Shortsighted increases in taxes on manufacturing could stall growth of this important sector and hamper our ability to develop industries outside of oil, gas and coal extraction.
For further information please contact:
The Alliance of Wyoming Manufacturers