Two weeks ago, the Mississippi Senate, at the behest of Lt. Gov. Tate Reeves, passed a bill that will reduce state revenue by a whopping $577 million over the next 15 years by eliminating the franchise tax on business and the two lowest income tax brackets for residents.
“The Tax Payer Pay Raise Act” now goes to the House.
We strongly urge our representatives to reject this bill on the grounds that the damage it will produce far exceeds any benefits.
At a time when Mississippi’s economy is struggling — earlier this year, a $68 million shortfall in revenue forced across-the-board cuts to all state agencies – the bill would force state agencies to make more deep cuts, probably another 4 to 5 percent.
The bill also comes at a time when the Legislature is struggling to find funds to repair our badly deteriorating highway system – the Mississippi Economic Council’s study says that will cost $375 million a year over the next 10 years.
Public education continues to be underfunded at all levels, especially K-12 education. When voters narrowly defeated an Constitutional Amendment initiative in November that would have required the state to fully fund K-12 education, legislators promised they would make every effort to increase funding if those funding decisions remained in their hands. This bill, which would cut state revenue by roughly 10 percent, essentially negates that promise.
The average Mississippian would save about $22 per month from these tax cuts, hardly enough to make an impact on their family budgets. A far greater impact will be felt by a reduction in services our taxes fund. Education, roads, public safety, parks — virtually every agency would be forced to make some very difficult, if not impossible choices.
If the people of the state were suffering from inordinately high state taxes, these cuts might be viewed as a tough, but necessary, move.
That is simply not the case, however.
Data from non-partisan Tax Foundation shows that Mississippians have among the lowest tax burden in the nation and our marginal tax rate is the lowest in the Southeast. While it is argued that some states have no income tax at all, property tax rates in those states are much higher than in Mississippi.
Our state leaders are operating on a myth that has persisted since the “trickle down” economics of the Reagan era. But research by the Brookings Institute shows that tax cuts do little to spur economic growth.
Those studies, based on more than 30 years of data, have proven that tax cuts have eroded services without producing a meaningful positive effect on economic activity. Yet our state leaders forge ahead anyway, slashing taxes that reduce essential services without any evidence that real benefits to the economy will follow.
Similar strategies in Alabama, Louisiana and Kansas have produced severe budget crises in those states. Why we would want to follow that dangerous path is hard to fathom.
It is a dangerous and irresponsible proposal. We urge residents to call their state representatives to demand that they vote against this reckless legislation.
The Dispatch Editorial Board is made up of publisher Peter Imes, columnist Slim Smith, managing editor Zack Plair and senior newsroom staff.
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