February 26, 2021
Mississippi legislators are in process of eliminating the state’s income tax, a “bold proposal” recently touted by Governor Reeves in his state of the state address, while at once substantially raising the regressive sales tax. House Bill 1439 has already passed the House, and is under consideration by the Senate.
The case for killing the income tax is at least as old as the Reagan presidency – tax cuts fuel economic growth; and a rising sea raises all ships. Workers will have more money to spend on goods and services. Businesses will want to come to an enlightened, business-friendly Mississippi; they will create more jobs, generating more blissfully untaxed income, which can in turn generate demand for more goods and services. Voila! Virtually all government has to do is cut the tax and get out of the way.
Aside from lots of evidence that tax cuts do not in fact supercharge economic growth (it’s been repeatedly tried, and repeatedly failed to produce the desired outcomes), the fly in the ointment is that eliminating Mississippi’s income tax would sap nearly $2 billion from state revenues, a chunk of money the poorest state in the U.S. can scarce afford to sacrifice. Hence the need for blunting the blow to revenue by raising sales taxes pretty much across the board – with the exception of groceries, the tax on which would (finally) go down.
This is really, really bad public policy, and social workers should do everything in their power to oppose the passage of HB1439. If they can’t stop it, they should at least witness to its certain destructiveness. Sales taxes are thoroughly regressive, hitting low-income people far harder than the better off. Income taxes, though not nearly as progressive as they ought to be, are considerably more fair, operating on the principle that those who have more should pay more into the public coffers in support of the public good.
Income tax elimination will almost certainly have the same long-term impacts as other tax cuts have had at least since Reagan popularized trickle-down, “supply-side” economics – Additional reductions of already severely underfunded public services, further deterioration of decaying physical and social (including public health) infrastructure, increased inequality and growing racial and class division, renewed efforts to privatize what’s left of the commons. “Shrinking government,” the utopian Holy Grail of tax-cutting (so-called) conservatives, in fact translates into a harsh reality of expanding austerity for the mass of poor and working people.