Wyatt's World
I’m not hugely excited about plans to eliminate the state income tax.
It’s not that I like taxes. Like everybody, I hate paying taxes. And I much prefer employing the free market to accomplish society’s economic goals. Private enterprise does just about everything better than government.
I’m not excited for two main reasons: First, I am cynical about this really saving money for taxpayers. There are literally dozens of different state taxes we pay. Cutting one tax doesn’t mean much if it causes other taxes to be raised.
Secondly, Republican politicians love to boast about how they cut taxes. There’s a lot of showboating going on here. Every Republican state legislator will be boasting about how he cut the personal income tax in Mississippi. It’s great for their political careers but less great for the state.
We’ve seen this show before when the state legislature cut reimbursements to the cities and counties and bragged about their austerity skills. Only one problem: This left the cities and counties forced to raise car and property taxes to make up for the state cuts. Taxpayers never benefitted.
This reminds me of all the big corporate subsidies the state government would give big manufacturers to come to Mississippi. All the politicians would pat themselves on the back, but when you studied the numbers it was terrible economic policy. And rarely did the companies ever follow through on their commitments. The whole thing was political theater and our lack of state growth during this era proved it.
I recently asked the state economist how much growth the legislative tax plans would generate in the future. His answer: A few tenths of one percent. That’s well within the economic model’s margin of error. Basically, it wouldn’t make a difference.
Kansas tried this in 2017, cutting taxes massively. Proponents predicted massive economic growth but it didn’t happen and the state had to reverse the cuts. So let’s not delude ourselves that this is a no brainer.
Everybody points to Texas, which has no state income tax. Texas is booming. Couple of points here: Texas has a huge amount of oil and wind energy. Texas has huge cities that generate massive tax revenue. Texas’ property taxes are sky high. What you don’t pay in income tax you pay in property taxes.
Probably the best argument for cutting
the state personal income tax is cosmetic. It sure sounds good. It will make Mississippi seem like a solidly pro-business state, hopefully spurring companies and people to move here. The other taxes that will have to be increased are less visible to the public eye.
There is another reason I am not excited about eliminating the state personal income tax: The state’s prison system is failing and needs a massive infusion of money.
The failure of our prison system has caused a dangerous increase in crime, although the average taxpayer doesn’t easily see the connection.
By underfunding our prisons, we have allowed the gangs to take over our prison system. Essentially, the private prison companies save costs by using the gang leaders as de facto prison managers. Their labor is free. They get paid by profits on the contraband.
This has given the Vice Lords and the Gangster Disciples a base from which to operate both in prison and outside of prison. This leads to a massive increase in violent crime and poses a danger to citizens.
In Alabama, the feds have ordered the state legislature to spend hundreds of millions of dollars to fix their prison problems. Mississippi dodged that bullet because of a conservative judge, but this won’t last long. If Mississippi doesn’t fix the problem, the feds will order the state legislature to impose massive spending. The money will come from taxpayers one way or the other.
The new state prison head, Burl Cain, is trying his best to turn the situation around, but he’s got to have more money for guards and rehabilitation programs. It’s un-Christian to use our prisons to lock up the mentally ill and young people who could be rehabilitated.
There are some functions of government the private market can’t do. Law and order is one. I would be more in favor of a big tax cut if our state was already doing a good job fulfilling one of its most basic responsibilities. But it isn’t.
Wyatt Emmerich is publisher of The Northside Sun in Jackson and owner of Emmerich Newspapers.