Last week, the lieutenant governor proposed a series of tax cuts — the largest of which included a reduction in corporate taxes. With the economy rebounding and corporate profits at their highest levels in decades, now is not the time to cut taxes, rather, we need to invest in the things that make Mississippi’s working families more productive like a high-quality public education system, access to health care and making college affordable.
Under current corporate tax law, 60 percent of corporations pay zero state income taxes and 83 percent of corporations pay less than $150 in income taxes annually. Over the past three years, corporations have been given over a dozen tax breaks. These tax breaks include incentives to build shopping malls and reduced penalties for non-payment of taxes. The current proposal adds one more to this long list by phasing out the corporate franchise tax over the next 10 years.
The franchise tax makes up almost 45 percent of the corporate income and franchise taxes collected, bringing in $242 million last year to invest in things that make the state a good place to live and do business, like our schools, and safe communities. To put that amount in perspective, it is about what we invest in our community colleges, which train and educate workers, or what we spend to help those suffering from devastating mental illnesses. It is almost four times what we spend on our state troopers to help keep us safe or on public health services to help prevent the spread of disease.
Corporate tax cuts are often touted as easy answers to make a state attractive to businesses, but the experience of other states suggests otherwise. States like Kansas, Wisconsin, Pennsylvania, and North Carolina have all recently passed sweeping tax-cut measures with results ranging from disappointing to devastating. Many of these states now have budget problems akin to those that occurred during the recession.
The biggest of these tax cuts took place in Kansas, and they are now feeling the consequences. The Kansas cuts have been even more costly than expected, eating up the state’s reserve funds and causing credit rating downgrades, without producing any of the promised quick economic gains — in fact, since the cuts went into effect, Kansas has added jobs at a slower rate than the rest of the country. Making matters worse, it has led to huge funding cuts to public schools and universities, which average families depend on and are building blocks of economic success.
Meanwhile, in Mississippi, our schools have been underfunded by over $1.5 billion since 2008. One in four bridges in the state needs to be repaired or replaced. One in three miles of interstate and four-lane highway needs repair. Local hospitals throughout the state are struggling to make payroll and keep their doors open.
In a recent ranking by Forbes Magazine, the “Best States for Business”, Mississippi ranked near the top one-third for states with the best business costs, which took into account taxes. However, Mississippi ranked lowest in areas like well-trained workers and quality of life — which both require long-term public investment in the things this corporate tax break jeopardizes, including high quality schools, safe communities and healthier people.
We can all agree that we want our state to be economically competitive and have more jobs. And just as important, hardworking Mississippians should have the opportunity to support their families and build a better future for their children. Continuing the trend to cut corporate taxes won’t help us reach either of these goals. Instead of cutting taxes for corporations, it’s time to focus on the things that are proven building blocks of economic success — better schools, a college-educated workforce and healthier, safer communities.
Corey Wiggins is director of the Mississippi Economic Policy Center.
Last week, the lieutenant governor proposed a series of tax cuts — the largest of which included a reduction in corporate taxes. With the economy rebounding and corporate profits at their highest levels in decades, now is not the time to cut taxes; rather, we need to invest in the things that make Mississippi’s working families more productive like a high-quality public education system, access to health care and making college affordable.
Under current corporate tax law, 60 percent of corporations pay zero state income taxes and 83 percent of corporations pay less than $150 in income taxes annually. Over the past three years, corporations have been given over a dozen tax breaks. These tax breaks include incentives to build shopping malls and reduced penalties for non-payment of taxes. The current proposal adds one more to this long list by phasing out the corporate franchise tax over the next 10 years.
The franchise tax makes up almost 45 percent of the corporate income and franchise taxes collected, bringing in $242 million last year to invest in things that make the state a good place to live and do business, like our schools, and safe communities. To put that amount in perspective, it is about what we invest in our community colleges, which train and educate workers, or what we spend to help those suffering from devastating mental illnesses. It is almost four times what we spend on our state troopers to help keep us safe or on public health services to help prevent the spread of disease.
Corporate tax cuts are often touted as easy answers to make a state attractive to businesses, but the experience of other states suggests otherwise. States like Kansas, Wisconsin, Pennsylvania and North Carolina have all recently passed sweeping tax-cut measures with results ranging from disappointing to devastating. Many of these states now have budget problems akin to those that occurred during the recession.
The biggest of these tax cuts took place in Kansas, and it is now feeling the consequences. The Kansas cuts have been even more costly than expected, eating up the state’s reserve funds and causing credit rating downgrades, without producing any of the promised quick economic gains. In fact, since the cuts went into effect, Kansas has added jobs at a slower rate than the rest of the country. Making matters worse, it has led to huge funding cuts to public schools and universities, which average families depend on and are building blocks of economic success.
Meanwhile, in Mississippi, our schools have been underfunded by over $1.5 billion since 2008. One in four bridges in the state needs to be repaired or replaced. One in three miles of interstate and four-lane highway needs repair. Local hospitals throughout the state are struggling to make payroll and keep their doors open.
In a recent ranking by Forbes Magazine, the “Best States for Business,” Mississippi ranked near the top one-third for states with the best business costs, which took into account taxes. However, Mississippi ranked lowest in areas like well-trained workers and quality of life — which both require long-term public investment in the things this corporate tax break jeopardizes, including high quality schools, safe communities and healthier people.
We can all agree that we want our state to be economically competitive and have more jobs. And just as important, hardworking Mississippians should have the opportunity to support their families and build a better future for their children. Continuing the trend to cut corporate taxes won’t help us reach either of these goals. Instead of cutting taxes for corporations, it’s time to focus on the things that are proven building blocks of economic success — better schools, a college-educated workforce and healthier, safer communities.
Corey Wiggins is director of the Mississippi Economic Policy Center.
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