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Wyoming and the Welfare State

Wyoming has a reputation for being a free and independent state. This is true in some cases, for example gun rights. But when it comes to economic freedom we have a lot to wish for. Our taxes are far from as business-friendly as is often suggested, and you have to use some really crafty calculations to suggest that Wyoming is generally a low-tax state.

In other words, on the tax side we are far from as free as we could be.

  But surely we are conservative spenders, right?

Wrong again. We have the highest government employment ratio in the country, and good luck finding a fiscally conservative gubernatorial candidate.

But it gets even better. Or worse, if you like economic freedom. The welfare state is alive and well in Wyoming. Our state and local government spending is as entitlement-laden and redistributive as in the rest of the country. Of every $1 that non-federal Wyoming governments spend, 66 cents go to entitlements and income redistribution – one measly cent short of the national average.

According to 2011 numbers from the Census Bureau, of the total $8.2 billion that Wyoming state and local governments spent, $5.4 billion was directly related to entitlements and income redistribution. The top items:

  • $2.5 billion on education, K-12 and up;
  • $2 billion on social services, including public welfare and health care;
  • $700 million in income insurance, including retirement and unemployment.

State and local spending on entitlements and income redistribution amounted to 12.5 percent of the Wyoming state GDP. The national average was 13.3 percent. Our marginally lower rate can ostensibly be attributed to lower-than-average costs for unemployment compensation. After all, during the recession a low unemployment rate has been one of the few bright spots in the Wyoming economy.

Our welfare state may seem like a non-problem given our ample tax revenues. However, in addition to the benefits of economic freedom, there are two big reasons for Wyomingites to wish for smaller government: the federal deficit and severance taxes.

Sooner or later, Congress will put a leash on federal spending, and when they do, federal funds to states will be on the chopping block.

As for severance taxes, it may seem unthinkable that we would lose even some of that money. Yet the school facilities fund will run dry in four short years.

The welfare state is nice – until government runs out of other people’s money. At that point, whatever challenges economic freedom brings, it is always the better alternative.

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Thursday, 19 October 2017
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