Saturday, November 26, 2016

Bill Crawford: the poor pay taxes too.

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.

Hmmm.

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.

Crawford is a syndicated columnist from Meridian (crawfolk@gmail.com)

39 comments:

Anonymous said...

What are these 'Highway Patrol Charges' mentioned in this article?

Hoodoo Suggestions said...

"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%."

Of course anybody with half a lick of sense knows comments like that are bull shit. Totally meaningless. As meaningless as 'average income' or 'the average weight of all Americans'. The claim has no practical utility. None.

According to the writer of this article, you should also consider the following: A man with his head in a 400 degree oven and his feet in a tub of ice water is, on average, comfortable.

Anonymous said...

if we eliminated wasteful spending and un-neccessary projects from state government, would this be a issue at all?

Anonymous said...

It really keeps our politicians busy coming up with more ways to take money from the people. Maybe if there was not so much waste or if less of the money went into politician's pockets, their job would be much easier. Since we all know that is not going to happen we will just have to give them more of our money. It isn't like we have any other choice.

Anonymous said...

Leaning on statistical analyses reported in the Clarion-Ledger is tantamount to leaning on total unsubstantiation.

PittPanther said...

Several comments have asked about "waste" in state government spending.

I'm confused.

Republicans, the party of fiscal conservatism and small government, runs both the legislature and the governor's office. Why is there any waste, since they are basically in total control?

Can someone tell me where the waste is, and why the republicans can't get rid of it?

Anonymous said...

Just wait with the neophytes going to DC taxes wouldn't be the problem. Keep your eyes on deficit spending and the National Debt.

Anonymous said...

Because so many of them think like the "genius" at 10:40; always quick to spout criticism and offer nothing of intelligence in return. Pitt, that doesn't answer your question, merely a tongue in cheek, but true, response.
Please take note of the rational offered in his final analysis.

Anonymous said...

11:11 AM
A lot like leaning on your statement or "analyses".

Anonymous said...

Raise the fuel tax and fix the f'n highways you dumb b***ards ! Narrow minded twits helping their rich buddies are hurting the poor. Tater's game plan may bite him on his fat white ass. Or I hope so.

Anonymous said...

By the time Tater gets to be Governor, he will have no choice. He will either have to raise taxes or seriously cut all state services. Edwards is dealing with the mess Jindal created in Louisiana. Tater will have clean up his own. I am sure he'll blame Obama, oh that's right it will be the Trump Economy.

Anonymous said...

Pitt, you should have learned by now that there is going to be lots of waste no matter what party is in power. It isn't a party thing, it is a politician thing.

Anonymous said...

Regulated markets through higher taxation is somehow an expansion of the free market?
God help us.

Anonymous said...

A service tax on lawyers, doctors, and realtors will never happen but Las Vegas bookies will probably give you good odds on an across the board 10% sales tax come January. The elderly can skip a week or so of meals and that will miraculously solve our massive self inflicted state budget deficit. If the legislators are feeling charitable they will allow every city and county to impose their own additional sales tax so they will stop asking the legislature for money. We might even be able to get the sales tax up to 15% or so in some places.

Anonymous said...

Keep your eyes on deficit spending and the National Debt.

Now the national debt is important to you? ROFLMAO

Anonymous said...

I am sure he'll blame Obama, oh that's right it will be the Trump Economy.

Blaming Obama will be allowable for 8 years. Enjoy.

s/ GeoWBush

Anonymous said...

I've always been cocerened about the debt buddy.

Anonymous said...

10:36 am
Sounds like all the fees we pay to them - for drivers license, used to be inspectin stickers, firearms permits, driver records, suspension costs. All that goes into the MS general budget for the legislature to spread around to all the agencies. The citation fees that the troopers write goes to the local counties. The highway patrol doesn't get one dime of any of that money.

Anonymous said...

I hear Sam Brownback has lots of helpful budget and tax advice.

Anonymous said...

i say we should trust Tate and Phillip to do what is best. they don't really like to be questioned. let them hold some secret meetings and i am sure they can work something out.

PittPanther said...

I can't wait to see a 5% sales tax on every house sold in Mississippi. Or an additional 5% on every one of those six figure operations performed at UMMC. Or how about an additional 5% tax on every "one call that's all" settlement that Schwartz gets.

You think Mississippi has a brain drain now? You ain't seen nothing yet. Why would anyone choose to live in a state with such tax policies?

HooDoo Suggestions II said...

12:08 - I'm the 'genius' at 10:48. I showed up back there to point out the illogical fallacy in the writer's reasoning. I felt no calling to solve problems. I always enjoy calling out a half-baked theory, such as was offered in the suggestion that an effective tax rate can be determined by considering the relative wealth of the payer. That's meaningless, worthless, of zero utility...except maybe in a classroom debate that goes nowhere and has no useful outcome.

For the slow thinkers like you, let me help you. The writer would claim that a man who has nothing other than the money he makes selling eggs...when he buys a pair of pants, the poor slob's tax rate is 95%. Now if he sells his three chickens, his effective tax rate is lowered to something around 91%. Therefore we should either feel sorry for people who sell eggs or we should give them free pants.

Rather a convoluted way to view our tax system, don'tcha think?

Anonymous said...

So will Tater blame Phil?

Anonymous said...

6:15am You shouldn't suggest others have "convoluted" thinking. That may be one of the most bizarre examples I've ever read. It's right up there with the absurd example of averages.

Apparently the two of you, IF you averaged your grades in high school, never figured out the numbers were all grades and that the more grades you had ,the less weight each grade had.

While there is no such thing as a perfect system, I would suggest you look at the graduated flat tax system of Estonia. They got to start from scratch and learned from our mistakes.

I would remind you that 10% of $50000 is less than 10% of $100000. And, I'd remind you that those with millions have more to loose in a failed state than those with nothing.

When we discuss taxes, no one seems to be able to make the distinction between personal income tax and business/corporate tax.

That's easy to understand since our tax code has failed to separate business profit and expense from personal income. The wealthiest in our country minimize their personal income in ways unavailable to the majority.

If your business is profitable enough, the corporation can pay for most of the expenses ordinary people have to pay out of personal income. If the business pays, it can be written off as a business expense. The wealthy often don't own their homes nor many of the contents ,nor the cars they drive , nor the planes they fly, their corporations do. And, those things are maintained and insured by the corporation. They don't have to pay to take care of grandma, they put grandma on salary. The money they pay for private school isn't from taxable personal income, it comes out of a trust set up for their children's education.

You can't discuss what is or isn't a " fair" tax system without looking at the tax system we currently have.

Even on a smaller scale, I know people whose maids and yard service and every vehicle driven by their families are paid for by their business, not out of their personal income.

You can look at divorce records in MS and see how many soon to be ex-wives discover their home and much of the most valuable contents are owned by their husband's businesses and aren't marital property. Indeed, KF has mentioned one of those on this very site but he missed the financial part of it.


For The Financial Wizard At 8:35 said...

I think you helped me make my point, 8:35. Thank you for that. While I didn't feel a need to mention divorces, maids, grandmothers or high school grades, I tried to make the point that such silly notions as averages (head in oven and feet in ice water) are meaningless to the guinea-pig and, at best, useless to everybody else. An average is meaningless no matter the context.

You are insane if you sit around thinking about your average grade, how many tests you took or grade-weight. That's equally as insane as reflecting on average income or average height or the average number of operations performed in the area hospitals last year. None of that has relative value. If you believe it does, please defend your belief.

The premise given in the article (effective tax rate) suggests that the poor man 'pays taxes too' and has a greater tax burden since he has less money. That's useless information at best and HooDoo at worst. It's only utility might be for those who believe the government should get involved and offset the burden.

Assuming for a moment that the government gives a man nothing and a man has to purchase, make or cultivate everything he wants and needs, then a man will only buy what he can pay for (I know, a useless concept). If I'm a poor man and need a refrigerator and have to pay a flat tax on it, that's the cost of keeping my stuff cool. If you're a rich man and need a refrigerator, you will pay the same tax as I do and while it may hurt me more, tough.

The alternative too many of us want is for the government to offset the cost of the refrigerator based on the poor man's lack of wealth.

One of the outcomes of a flat tax system would be this: If refrigerators are priced at a level that causes so few to be sold, let the manufacturer lower the price. If there are enough poor people who can't purchase them, the price ought to come down. If not, let the poor buy blocks of ice.

The government ought not be in the refrigerator-gifting bidness. Nor should the government tell a manufacturer or merchant what price he can put on his refrigerators. Nor should the government be in the business of tabulating who owns them, what they paid, how far they live from the next reliable refrigerator, whether disabled people use the refrigerator or how many live in the household where the fridge sits.

Anonymous said...

I would remind you that 10% of $50000 is less than 10% of $100000, posted by 8:35.
The rest of your post may make sense but when I read this pearl of wisdom it was so far from the truth that I couldn't go any farther. You need to learn basic math.

Anonymous said...

As less people have more of the money....those people will have to pay more taxes to support the public.

Should those with the money be able to shift the burden to the lower rung.....there will be anarchy.

This is not difficult.

Two Is Greater Than Ten.. said...

But, 9:49, the rest of 'his post' DOES NOT make sense, except to himself.

Anonymous said...

9:49 am Please stay with me. Yes the percentage is the same, but the tax paid is not the same. The person making $50000 pays $5000 and the person who makes $100000 pays $10000.

9:35 am It's hardly insane to have appreciated the weight of grades. I needed to know what grade I had to make on a test to bring a B up to an A and if that were possible.
I don't know why this basic math is hard for you.

An average takes into account that you don't make the same grade on every test. You are suggesting that one grade can be bad and good at the same time.

You notion that government gives a man nothing is ridiculous. Government gives a man a level of security, transportation routes, a monetary and exchange system, laws to protect him from being cheated in his transactions and has likely educated him. Perhaps, you think you came out of your mother's womb fully formed and no one ever helped you along the way. Please go to Syria or Russia and try to start your own enterprise.

A flat tax has zero to do with pricing. It has to do with every citizen paying a fair percentage given the benefits they receive from living in a free country. Those who benefit the most pay more.

And, you are treating supply and demand, personal and business taxes , and competition as if they are all the same. That's probably why you can't appreciate averages.

Forgive me for trying to give you real life, simple examples of how unfair our current tax system is and how it favors the very wealthy.

It's rather obvious that too many people have very little understanding of how Americans at every level of our economic system actually live.

Once you made the " let them buy ice" comment, I realized you have never seen a home with no electricity for a refrigerator or indoor plumbing. You just camped out for a few days. You have no concept of what is involved in surviving in that environment...how time consuming simple survival becomes in a modern era. Or how the system worked when my grandmother didn't have electricity or plumbing. Life was dependent on the entire family working the farm from sun up to sun down. They had cows so they didn't have to keep milk cold.

No man is an island but these days, quite a few seem to think they are not only an island but the sun around which the world revolves and they sprang from Zeus fully formed!



Anonymous said...

@ 9:35am - "If I'm a poor man and need a refrigerator and have to pay a flat tax on it, that's the cost of keeping my stuff cool. If you're a rich man and need a refrigerator, you will pay the same tax as I do and while it may hurt me more, tough."

O.k. - then you just upended our system. Because guess what - who's going to be buying anything? Seriously? That means those with the buying power would have to make up the difference by buying goods that 12 households could do on their own.

Inflation is a b*tch and the buying power of many Americans - which are households making under $90k a year - is nill. That's hefty because they move the economy and are job creators due to the purchases they make. When they can't buy big ticket items, then our economy goes to a stand still.

What you are proposing is anarchy.

Anonymous said...

9:09. poor people are buying things just like the rich people. The only difference is the poor use a credit card. If they can pay the credit card bill or does not matter. If they really need the item they are buying on credit does not matter. Since a growing % never really are going to pay off the credit card the price of the item does not matter.
If they do not have a credit card there is always someone who will finance it for them, along with a good rate of interest.
The poor are buying more than ever, just not ever paying for it.

Anonymous said...

@ 9:50am

You said - "poor people are buying things just like the rich people. The only difference is the poor use a credit card. If they can pay the credit card bill or does not matter...............................Since a growing % never really are going to pay off the credit card the price of the item does not matter."

Yeah - they are buying it because they are purchasing essentials - toilet paper, toothpaste, transportation cost, washing supplies for clothing, hell - groceries. You consciously ignored inflation.

Income inequality is not a myth - it is real. However, Mississippians are falling for the snake oil economic policy those jokers on the hill are selling! SMH


http://www.epi.org/publication/income-inequality-in-the-us/#epi-toc-3

Anonymous said...

10:41, I do agree with your thoughts. Inflation is a big problem. Part of the problem with inflation is because the people buy on credit and never pay for what they buy. A business can put any price on something and people will continue to buy it when they know they are not going to pay for it.
Look at all of the people fighting to get in the stores. How many do you think are paying with cash? How many are buying toilet paper, toothpaste, or food?

Anonymous said...

The above lesson on 'averages' is pure stupidity. Nobody in the history of test-taking has ever gone through the mental gynmastics required to arrive at a grade he needed in order to raise his average - And stopped studying at a particular point that he thought represented the place on a scale where he could stop studying and go take the test and turn a B average into an A average.

People study or they don't. They make good grades or they don't. They improve their year end grade or they don't. It has nothing to do with an anal retentive exercise in considering how many grades, given what various weights, went into a math-grinding machine and spit out an average.

I can understand how you find that logical, though. You probably had to explain to your mother why you got a C in botany and you told her you made a low D in the first part of the semester and improved it to a mid-range B the second half. Was she satisfied? Did she buy your law of averages bullshit? Did you get an increase in allowance and she packed more cookies for your trip back to the university when you left?

I've read this statement of yours five times and it's nonsense: "...those with the buying power would have to make up the difference by buying goods that 12 households could do on their own." WTH? It means nothing of the sort.

Anonymous said...

@12:17 So is basic math a liberal plot or a conservative one? Is it the same kind of math that tried to convince people like myself that the Kemper County coal plant would be fully operational by now?


Anonymous said...

1:45, no such thing as basic math anymore. Ask any politician.

Anonymous said...

4:03 PM
Ask any elementary school teacher. They are more honest.

Step Right Up - One Dollar, Today Only... said...

1:45...You attempting to compare the mythical value of averages to a snake oil salesman convincing you a power generation plant is a worthwhile idea tells me all I need to know about you.

Anonymous said...

The law of averages is a myth, but it seems the way that you're trying to go about debunking that myth in the wrong way as a grade point average has nothing to do with natural balance in the universe.

You are conflating the idea of "average" with the notions of median and mean, which to your credit, are being used improperly. The mean of a grading system and median of a household income have nothing to do with trying to predict the future --they're just notating what's there already.

With 'the law of averages', one can try deduce that if I keep gambling my money, I'll eventually win. It is the case on a slot machine, but not on a roulette wheel. Man (the Casino) has control over the how the slots payout, not the wheel (presumably). The house always wins, but still needs to file bankruptcy a la Orange God Man.
The belief in the law of averages (subconscious) is how a leader can keep hope alive in a chaotic, primal world. Having faith in a higher power helps too.
In a generalized sense, you can get away with applying 'the law of averages' to make the world an easier place for comprehension.

The belief in the law of averages is how politicians sold people on the idea of clean coal technology in the first place. "With enough tries, we can get it right!" Getting it right could be the case eventually, but I wouldn't bet the house on it. Only in a world with an infinite supply of money is this approach remotely okay. "Come and spend untold billions on the God of Chaos" isn't exactly a great selling point to consumers or investors, now is it?

*Now, back to the larger point at hand:

*Nothing says no to a tax plan such as this like a pesky title that says "Poorest State in the Union". That last little phrase is helpful. Remember it.

*When you've got a state full of relatively poor people addicted to big government for jobs, food, education, and a non-visible private sector, this whole trickle down theory gets complicated.
The only way this "less government" approach will work remotely effectively is through incrementalism (slowly chipping away at government) and deregulation of unrealized markets.
Raising everyone's taxes in one fell swoop will throw the state into chaos.

Telling everyone, "our capitalist masters declared your job an enemy to the free market" is going to be some tough stuff to sell in MS.


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