Jim Beam column:Leave state’s taxes alone

Published 7:45 am Sunday, February 27, 2022

When Mississippi lawmakers started talking about phasing out their income tax, it was only a matter of time for Louisiana legislators to start singing the same tune. Even worse, GOP conservatives in this state also mentioned ending a .45 percent state sales tax early that goes off the books in 2025.

Jeremy Alford in his LaPolitics Weekly quoted state Rep. Jack McFarland, R-Jonesboro, and chair of the Conservative Caucus, who said, “With all of this money available, is this the time to reduce the sales tax and get a jumpstart on the .45?

“That’s something caucus members  are interested in and something that’s been explored. We want to do it responsibly,” McFarland said.

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The Republican speaker of the House in Mississippi repeated one of the most popular lines of conservatives when he said, “There is no downside to putting money back into the pockets of Mississippians.”

The Associated Press answered that line when it said, “Mississippi is accustomed to being first in the worsts: It’s one of the poorest, unhealthiest states in the nation, with public schools that are chronically underfunded.”

Opponents of doing away with the income tax called it a terrible idea. They said it would mean even less money for schools, health care, roads, and other services, especially hurting poor and working class residents.

The opponents also point to Republican-led Kansas, which enacted big tax cuts in 2012 and 2013 but repealed many of them in 2017 after large and persistent budget shortfalls.

The Mississippi income tax accounts for 34 percent of state revenue. Wealthy people would see the biggest financial boost from eliminating the income tax, because they are the ones paying the most now.

A Democratic state senator in Mississippi said people don’t choose where to live because of tax policy but because of family ties and quality of life. He said people live in high-tax New York, for example, because the city offers opportunities.

The senator said, “The notion that if the people in Manhattan only found out that Mississippi did not have an income tax, they’d all … get on a bus to Mississippi and move down here — it’s just laughable on its face.”

A retired school administrator said he’s torn. “On first hearing about it — oh, great, we’d have more money. On the other hand, we’re in such a poor state. How would it affect those who are less fortunate?”

Mississippi’s Republican lieutenant governor said, “People expect us to educate our children. That’s the future of Mississippi.” He and other leaders are proposing a separate plan that would reduce the income tax but not eliminate it.

 That is what Louisiana legislators and voters did when they approved a constitutional amendment last November that reduced the maximum individual income tax rate from 6 to 4.75 percent.

As far as ending that .45 percent sales tax increase early, McFarland has apparently forgotten “all this money available” he is talking about is one-time money that will be used for one-time expenses. Much of that will go for continuing to recover from hurricanes, a freeze, and a flood.

The Louisiana Legislature did away with a higher income tax in 2008 that voters had approved in 2002. Sales taxes were cut at the same time. The 2002 Stelly Plan was hailed by the late-Gov. Mike Foster as major tax reform.

Unfortunately, the state spent the next eight years trying to fund state budgets that suffered from major reductions. State agencies and state workers paid the price. The problems ended when the Legislature approved that .45 percent sales tax increase at a special session in 2018.

Louisiana’s individual income tax brings in $3 billion annually, which is nearly one-third of some $10 billion in state revenues. Federal funds provide other money for the state budget.

Legislators at their session beginning March 14 should concentrate on wise use of billions in federal funds that won’t come back anytime soon.

McFarland indicated that is what they are going to do, but he still mentioned ending that .45 percent sales tax increase early. “We want to stick to the basics, like managing how these one-time dollars are appropriated, and trying to make sure we’re not creating recurring expenses.”

The best way to do that is for McFarland and others to forget about ending the .45 percent state sales tax increase before 2025.