- Between 2017 — the first fiscal year after the 2016 Taxpayer Pay Raise Act cut individual income taxes — and 2024, general fund revenue collection in Mississippi increased by over $2 billion.
In his latest opinion column, Bobby Harrison argues that “anemic” revenue collection in Mississippi is a byproduct of two prior income tax cuts in 2016 and 2022, with a warning as to the 2025 tax cut that is yet to take effect.
Harrison writes, “It should not be a surprise that what was touted as the largest tax cut in state history might be resulting in less revenue to fund Mississippi’s vital services such as education, law enforcement and health care.”
Think of the children, good sir!
So just how bad is it? Between 2017 — the first fiscal year after the 2016 Taxpayer Pay Raise Act cut individual income taxes — and 2024, general fund revenue collection in Mississippi increased by over $2 billion, or roughly 36 percent.
In the two years that followed the 2022 Tax Freedom Act, revenue to the state increased by $322 million.
But spending on “vital services” is in danger, right? The general fund budget approved for the current fiscal year topped $7 billion, up over $1.24 billion since 2017. In K-12 education alone, spending increased by $796 million over this span. William Winter would approve.
The budget just authorized by the Legislature for the upcoming fiscal year is north of $7.1 billion. No really, not since Jack the Ripper roamed the streets of London have we witnessed this kind of maniacal slashing.
The Bells in My Head
Surely cause exists for the alarm bells rattling around in Harrison’s head?
(Don’t call me Shirley).
Every year the Joint Legislative Budget Committee (“JLBC”) adopts a revenue estimate for the following year. The JLBC estimated $7.600 billion in general fund revenue for the current fiscal year that ends on June 30th. This figure, if collected, represents a $600 million surplus above the approved budget.
Revenue numbers reported by the Legislative Budget Office through May show total general fund revenue exceeding the JLBC estimate by approximately $5 million on the year. The fiscal year ends on June 30th. Notably, individual income tax revenue thus far in the fiscal year exceeds JLBC’s estimate by $150 million.
But the May-specific revenue number came in $995,906, or 0.18 percent, below the estimate, and it is true that after nearly a decade of meteoric rise, total revenue growth has flatlined. But neither of these facts are proof that prior years’ tax cuts aren’t working according to design, that revenue collection is “anemic,” or that “vital services” are in jeopardy.
Zoom out. In the 9 years since lawmakers embarked on gradually phasing out the state’s income tax, revenue has exceeded the JLBC’s estimate all but once — in 2020 when COVID shutdown broad swaths of the economy.
Month after month after month, revenue exceeded estimates and not once did Harrison write an article declaring “the tax cuts are working!” He waited for one miniscule monthly drop to declare they weren’t. It’s like a meteorologist who incorrectly predicts thunderstorms for 9 years, only to take a victory lap on the day it finally sprinkles.
Missing the Point
I want to be abundantly clear. I am not saying that past income tax cuts resulted in the tremendous revenue gains experienced since 2016. Merely that those revenue gains occurred. Economies are complex things.
I also am not saying that tax cuts cannot, or do not, put downward pressure on revenue growth. Just that the 2016 and 2022 cuts, here to date, have not resulted in “anemic” collections that threaten “vital services,” when the exact opposite has been our experience.
My point is this: if one is to willy nilly attribute a momentary slow in revenue growth — after a colossal runup — to tax cuts, then why not attribute the colossal runup to tax cuts? The agenda only seems to work one direction.
Now, for a concession. The 2025 tax plan to eliminate the state’s income tax will almost certainly decrease revenue collections. (I suppose it’s a good thing we have been operating with massive surpluses). However premature he currently is, people like Harrison will dance an “I told you so” jig.
They will be missing an even bigger point.
The premise of a tax cut is not that it will result in even more revenue to allow government to grow even bigger. That cuts, over the long haul, do stimulate economic activity in the private sector — which in turn yields new revenue — is a perk, not the purpose.
The premise of a tax cut is that the money you earn belongs to you, that the government is already taking enough of what you earn to satisfy its core functions, and that it should let you keep more of it.
Russ Latino
