Tax Cut Proposals: What to Look For
August 4th, 2014
As state revenue has returned to pre-recession levels, lawmakers have begun to talk about tax cuts as a way to make the state more economically competitive and help working families. No specific proposals have been released, but below are some ways you can evaluate the proposals as they come up.
1) How will they affect our schools, health, and safety?
If you just look at state revenues since 2010, it looks like we’ve had quite an increase in revenue. However, taking the longer view, you can see that while revenues are finally rebounding, they are coming up from a deep trough that caused, among other things, teacher layoffs, increased college tuition, and a dramatic shortage of state troopers—at the same time, needs for services have grown.
Despite modest increases in K-12 education funding, largely earmarked for teacher pay raises, the state is still underfunding schools this year by over $200 million schools—topping off a cumulative shortfall of $1.5 billion since 2008. The last year that our K-12 schools were funded to adequate levels was 2008—the pre-recession revenue peak.
2) How will they affect low income working families?
Low income working families in Mississippi pay a larger portion of their income in taxes than higher income Mississippians. General personal and corporate income tax cuts provide more help to higher income taxpayers than the low income working families who struggle to make ends meet. What would help low income working families? A reduction of the sales tax on groceries and a refundable state Earned Income Tax Credit. However, even the benefits of these potential tax cuts should be balanced with offsetting increases in revenue in order to maintain our schools, health, and safety.
3) Will tax cuts work to make us more competitive?
We can all agree that we want our state to be competitive and add jobs. Tax cuts sound good at first, but won’t work. Most of Mississippi’s weaknesses lie in the fact that we have not maintained sufficient investment in the things that would work to make our economy strong. What would really help us be competitive? We need better schools, a college-educated workforce, and healthier communities. If we give away the revenue gains we have made over the last couple of years, we’ll continue to hurt the very things that will build our economy.
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