Speaker of the House Philip Gunn and Lt. Gov. Tate Reeves have decided to shift Mississippi’s tax burden – less on income and businesses, more on users.
“Because I think everybody ought to have skin in the game,” explained Gunn.
It appears as though the Speaker has bought into the notion that many poor Mississippians don’t pay state taxes.
If this were true, of course, proposals to expand user taxes wouldn’t do anything to address the problem. That’s because Mississippi user taxes are already quite expansive. Nearly 50% of all taxes going into the state’s general fund already come from user taxes.
Sales taxes, the biggest percentage of general fund money at 38.2%, are user taxes. Hard to imagine any folks not having skin in the sales tax game. Quite a few likely participate in sin taxes too (gambling, alcohol, and tobacco taxes) which account for another 6.7% of revenue. Then there are auto tag fees, highway patrol charges, and other use taxes that bring in 4.7% of revenue. All that totals 49.6% of general fund revenues.
Reeves’ and Gunn’s choice expert from the Tax Foundation has recommended expanding sales taxes to include drugs and fuel plus services provided by physicians, lawyers, veterinarians, beauticians, and more. She also suggested eliminating sales tax holidays and raising tobacco and gaming taxes.
That sounds like a lot of additional taxes for average Mississippi “users” who are taxed enough already, not a way to get others to have more skin in the game.
Oh, and that doesn’t count fuel taxes, which all car and truck drivers pay. These are user taxes that do not go into the general fund, but generate about 15% as much revenue as sales taxes. The tax expert wants to put a sales tax on fuel. Then, we can once again pay sales taxes on federal fuel taxes. We eliminated taxing taxes in 1987.
If you consider the following, you begin to wonder why they really want to shift the tax burden.
Mississippi already has one of the nation’s lower state and local tax burdens, ranking 41st out of 50, according to data published by that same Tax Foundation. More foundation data shows Mississippi has the 2nd best State-Local Tax Burden as a Percent of Income. Then there’s data reported by the Clarion-Ledger showing the effective state and local tax rate for poor Mississippians is already twice that for wealthy Mississippians, 10.4% to 5.3%.
As for business taxes, consider what the paper’s Geoff Pender wrote, “Trying to shift more of that (business) tax burden onto rank-and-file Mississippians, in the near term, will wallop them.”
What this proposed tax shift really seems to be about is to let wealthy Mississippians and businesses (sources of most political contributors) have less skin in the tax game.
While pleasing some, shifting more state taxes on to rank and file “users” will upset more, especially when they realize they have to pay more taxes so Walmart and out-of-state conglomerates can pay less.