Mississippi Is the Latest in a String of States Pursuing Short-Sighted, Top-Heavy Tax Cuts

A flagship piece of ITEP’s state work is Who Pays?, a comprehensive look at the tax codes in all 50 states and the District of Columbia. The conclusion of the report has remained the same for the 25 years that we’ve produced it: The vast majority of state tax codes are regressive and contribute to widening economic inequality. In years when we don’t produce this major report, we provide distributional analyses to state advocates who are working toward more progressive tax policies that allow state and local governments to raise the revenue they need to fund critical priorities. This year, we are producing one analysis after another demonstrating how proposed tax cuts are skewed toward the rich. This is alarming. The highest-income households literally grew richer over the pandemic while many ordinary families lost jobs. States that cut taxes for those at the top will not only compound economic inequality, they will miss an opportunity to invest in their communities.

An egregious example of short-sighted tax-cut fervor happened last week in Mississippi. The House passed a bill that would gradually eliminate the state income tax, increase the general sales tax by 1.5 percent, reduce the sales tax on groceries from 7 percent to 4 percent, and cut the car tag tax. Altogether, the proposal would cost the state more than $1.5 billion in revenue and lavish most of the benefits on the wealthiest residents. House leadership has tried to frame the proposal as a benefit for low- and middle-income residents because it includes a grocery tax cut, but when taken together, the bill increases taxes for the state’s lowest earners and seniors on fixed incomes while saving wealthy households thousands of dollars.

Not only is the proposal deeply inequitable, Mississippi simply cannot afford it. Lawmakers are nonsensically trying to use a one-time surplus (thanks to federal aid that was intended to help low-income communities weather the pandemic) to make long-term, structural tax changes that will perpetually widen the economic gulf. House leadership is also trying to pull a clear ‘bait and switch’ by enacting popular state tax cuts at the expense of local budgets. By cutting the car tag tax, municipalities will likely be forced to eventually make budget cuts or enact regressive fines and fees that will further exacerbate racial inequities.

I shared a few more thoughts on Twitter about the tax bill passed out of the Mississippi House of Representatives:

We all need to be paying attention to Mississippi right now. Last week #MSHouseofRep overwhelmingly passed (w/o any debate!) an outrageously irresponsible bill that’ll kill the state budget by >$1.5B, raise taxes on the poorest residents and create a windfall for the richest 1/8

— Kamolika Das (@Kamolika_Das) January 17, 2022

The House/@PhilipGunnMS’s main argument is that MS can afford it due to the budget surplus. But MS is 100% offsetting the costs of the cuts in the first 2 years w/ the surplus. What happens in the out-years? The surplus is due to federal aid which is TEMPORARY pic.twitter.com/sP8OoFg07c

— Kamolika Das (@Kamolika_Das) January 17, 2022

As ID Rep @IlanaRubel eloquently said: “I get frustrated by the use of the word [surplus]… If you haven’t paid your mortgage and haven’t paid your bills, it might look like you have a lot of money in the checking account. But it’s false to characterize it as a surplus”

— Kamolika Das (@Kamolika_Das) January 17, 2022

This is especially true in MS where per-pupil funding has lagged other states. How can a state that resorts to privatizing state parks and has a huge backlog of autopsies piling up, in good conscience, spend down a 1-time surplus by locking in long-term tax cuts for the rich?

— Kamolika Das (@Kamolika_Das) January 17, 2022

Many people are applauding the @MSHouseOfRep bill to increase teacher pay. Of course MS teachers need a pay raise (they STILL don’t have the right to legally strike). But what good’s a pay raise when state tax cuts will force school closures & layoffs??

— Kamolika Das (@Kamolika_Das) January 17, 2022

Not only does MS #HB531 bill cut income taxes, it also ups sales taxes to 8.5%, reduces the tax on car tags & cuts the grocery tax to 4%. Sure, I also support cutting grocery taxes but the idea that low-income residents & seniors come out on top after all the changes is laughable

— Kamolika Das (@Kamolika_Das) January 17, 2022

MS HB531’s called the ‘MS Tax Freedom Act’. It begs the question – freedom for whom and from what? Nearly HALF of the net $1.5 billion tax change goes to top 5% of earners. This isn’t freedom – this is further cementing economic & racial injustice @PhilipGunnMS

— Kamolika Das (@Kamolika_Das) January 17, 2022

#MLK said “I have a dream that one day even the state of Mississippi, a desert state, sweltering with the heat of injustice and oppression, will be transformed into an oasis of freedom and justice” I want to have faith but #MSHouseofRep is taking us further away from this vision

— Kamolika Das (@Kamolika_Das) January 17, 2022

Read this statement by @OneVoiceMS to learn more, especially about how the proposal provides a major benefit for the state’s wealthiest, primarily white taxpayers https://t.co/hUPiK1qwaX

— Kamolika Das (@Kamolika_Das) January 17, 2022

There are better ways to leverage tax systems to help those who need it most.

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