Wyoming Corporate Income Tax Bill Fails

A bill introduced in the Wyoming 2019 legislative session that would have imposed a corporate income tax on specified business has failed. The bill would have imposed a corporate income tax on:

  • retailers with more than 100 shareholders; or
  • accommodation and food service providers with more than 100 shareholders.

However, after easily passing the House, H.B. 220 died in Senate committee.

Wyoming Constitution Prohibits Income Tax Without Corresponding Credit

In 1974, the Wyoming Constitution was amended to prohibit the imposition of an income tax “without allowing full credit against such tax liability for all sales, use, and ad valorem taxes paid in the taxable year by the same taxpayer to any taxing authority in Wyoming.”

Perhaps part of the reason for its failure, H.B. 220 did not contain any provisions for such corresponding credits. This omission would have most certainly led to constitutional challenges, had it been enacted. Further, if an increase in revenue is the ultimate goal of enacting a corporate income tax, any proportionate credits would likely preclude any revenue gains from an income tax.

How Many States Do Not Impose Corporate Income Tax?

Currently, there are only six states that do not impose a true corporate income tax. However, four of those states impose some other form of business tax:

  • Nevada (commerce tax on gross revenue);
  • Ohio (commercial activity tax on gross receipts);
  • South Dakota;
  • Texas (franchise tax on taxable margin);
  • Washington (business and occupation tax); and
  • Wyoming.

By Amber Harker, J.D.

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CCHTaxGroup

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