We previously highlighted how the Mountain States compare on national tax rankings. For the most part, Idaho, Montana, and Wyoming are ranked near each other with modest-to-low tax rankings while Washington consistently ranked unfavorably in comparison. With the start of the new fiscal year and state tax changes taking effect, these rankings may change in the next year.
For example, taxes continue to be reduced in Idaho, Montana, and Wyoming while Washington is taking the opposite approach by imposing the state’s first income tax (starting on capital gains income) and dramatically increasing energy prices with a new cap and trade environmental policy. The Evergreen State’s cap and trade program has already earned Washingtonians the dubious distinction of having the highest gas prices in the country.
The various approaches to tax policy can best be summarized by the governor of each state. Considering the following comments:
“With all due respect, our billionaires do not need a tax cut right now in the state of Washington. And when you give a general tax cut, you’re giving breaks to billionaires in the state of Washington. I don’t really think we need that right now,” Gov. Inslee (WA) – Dec 2022
o Recent WA tax changes: Imposed 7% income tax on capital gains above $250,000; imposed 0.58% payroll tax on all workers for long-term care; imposed cap and trade policy resulting in a price of $56.01 per ton of carbon. In comparison, California's price is $30.33 per ton of carbon.
"Since I took office, we have delivered more than $2.7 billion in tax relief to Idahoans – more than any other state per capita … Idahoans are clamoring for additional tax relief, and the Legislature’s actions are a step in the right direction on this longstanding issue," Gov. Little (ID) - March 2023
o Recent ID tax changes: Reduced graduated income tax rate of 6.5% down to a flat rate of 5.8%; income tax rebates; property tax rebates.
“We recognize the importance of keeping property taxes low so families can remain in their homes and communities,” Gov. Gordon (WY) - April 2023
o Recent WY tax changes: Property tax rebates.
“Montanans overpaid their taxes, and we’re giving it back. I look forward to getting this money back into Montanans’ pockets where it belongs," Gov. Gianforte (MT) - June 2023
o Recent MT tax changes: Reduced top income tax rate from 6.75% to 5.9%; income tax rebates; property tax rebates.
It will be interesting to see how these tax changes impact the Tax Foundation's next edition of tax rankings for the Mountain States.