When most people think of tax havens, they picture offshore locations that attract millionaires, billionaires, and business owners due to their low tax rates. Some critics, however, argue that Jackson Hole, Wyoming, should be included when we talk about tax havens, given the reasons that it attracts the 0.1 percent.
According to Bloomberg Wealth Manager Magazine, Wyoming is one of the country’s “wealth-friendliest” states. Teton County, especially Jackson Hole, has transitioned from a middle-class vacation destination to the wealthiest county in the U.S. It is also the county that has the highest income inequality in the country.
According to data from the Economic Policy Institute, the average income of the top 1 percent is $16,161,955, while that of the bottom 99 percent is $122,447. This results in a top-to-bottom ratio of 132.0.
Why Jackson Hole Became a Tax Haven
Those who have looked into the city’s history and policies say that Wyoming is a tax haven for the simple fact that it can afford to do so. On the one hand, residents are culturally opposed to taxation, which is the case for many other western states as well. The state’s money, however, specifically windfalls from coal, gas, and oil, have made it possible for the state to adopt lenient tax policies.
To put that financial history into perspective, consider that the financial industry in America boomed while those windfalls were occurring. During the 1980s, the rise in investment income meant that it made up 30 percent of income within the community. By the 1990s, this was 40 percent, and it was 50 percent by 2004. By 2015, the figure was 80 percent. If you prefer figures to percentages, the 1970 investment income adjusted for inflation would be $52 million in Teton County. By 2015, this was $3.4 billion.
These figures show that Jackson Hole’s path to being the richest county in the country came from investment income, not economic growth from things like rising salaries.
Why People Move There
Justin Farrell talked to residents of Jackson Hole and Teton County as part of his research for a recent article and book. The ultra-wealthy residents move to the county due to concerns about the environment and the small-town charm. However, this has unintended consequences, like justifying consuming vast amounts of natural resources.
Land Trusts and Easements
Teton County is filled with land trusts and easements. Conservation easements are when a property is closed from future development, and in return, the owner gets compensation. While they are useful from a conservation standpoint and a financial standpoint for landowners, they are also something that the ultra-rich can take advantage of.
The ultra-rich landowners in Teton County can get cash payments and tax benefits for agreeing not to develop the land. This is true even if they had no development plans.
At the same time, the inability to develop the land in the name of conservation causes a reduction in available affordable housing. This results in workers finding it nearly impossible to find affordable housing nearby.
Many workers in Teton County live in Idaho since there is no closer affordable housing. The trip between the two states includes going up and down Teton Pass, which is 8,431 feet high and dangerous in winter.
The Rich Benefit From the Inequality
The ultra-rich who live in Jackson Hole not only get the tax benefits of the area, but they also get to take advantage of the working class. This working class is poorly paid and cannot afford to live in the area. At the same time, the rich get access to gorgeous mountains, natural beauty, tax incentives, and a flattering environmental philanthropy network.
A closer look at the county shows that tax havens can truly come in all shapes and sizes.
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