American Forum Op-Ed

This was certainly not the way Gov. Haley Barbour wanted to end his term in state office. Tax revenues are down $371 million and counting. State budget alternatives are grim, with cuts of at least 12 percent for most agencies, including education.

Seeking opportunity amid crisis, Barbour is recommending major government realignment and simplification, as well as consolidation in K-12 and at the university level. By including such incendiary proposals as combining Alcorn State and Mississippi Valley with Jackson State University, Barbour took the chance that his proposals will be dead on arrival at the Capitol in January. His challenge to support his proposals or “come up with a better way” ought to be taken seriously.

Cuts and consolidation should not be the only options on the table. The kind of cuts the governor is proposing will be a severe shock to the economy, just when Mississippi and the nation are trying to climb out of the Great Recession. This decade’s declining growth in Mississippi’s major revenue sources – personal and corporate income and sales taxes – should have lawmakers looking at the state’s tax structure.

There at least five ways Mississippi could adjust its tax structure to help make it through the current economic troubles and to build a better revenue picture for the future.

1. Mississippi could join the 20-plus other states in the Multistate Tax Commission to prevent large corporations from playing shell games to avoid paying state taxes.

The U.S. Government Accountability Office reported last July that 30 percent of corporations with earnings of $50 million or more paid no federal income taxes between 1998 and 2005. In 2003, the Multi-state Tax Commission found that large corporations avoided $7 billion in state corporate income taxes by, among other tactics, shifting reports of profits from state to state. Corporate income tax revenue accounts for only about 5 percent of overall revenues in Mississippi.

The solution is to join the Multistate Tax Compact and require every multistate corporation to follow uniformity guidelines when reporting income and profits. This will give the state a way to validate corporate returns. It works for other states and it could work here, too.

2. Mississippi could increase the top personal income tax for the wealthiest among us. Personal income taxes make up about 25 percent of state and local tax revenue. The wealthiest 20 percent of all Mississippians take home almost half of all income earned. The real income of top earners has increased 23 percent from 1999-2005, while the bottom 60 percent of Mississippians saw a drop in real income when adjusted for inflation – even while worker productivity increased. Creating a new state income tax bracket of 6 percent for taxable income over $125,000 certainly would be a better alternative than closing 10 mental health crisis centers and hospitals.

3. The National Association of State Budget Officers suggests that each state monitor tax breaks it gives corporations. If the return from these tax breaks falls short of promised benefits to the state economy, a state could choose to impose a surcharge. Hiring more tax auditors also could net millions of dollars.

4. The Mississippi House has tried for a number of years to increase fees and fines to generate revenue, and to ensure that fees for state services actually reflect the cost of those services. Penalties and fines for violations of labor safety and environmental regulations, for example, should be costly enough to deter such practices, to clean up problems, and to adequately support state agency efforts to oversee and enforce regulations protecting the public. DUI fines also could be increased for each succeeding arrest, as is done in Louisiana.

5. Many health advocates support following the lead of Arkansas and other states in taxing sugary soft drinks and nutrition-poor, salty and sugary snacks. Mississippi still has the nation’s highest obesity rate. Making foods that contribute to obesity more expensive will help families choose healthier foods, and help persuade food manufacturers to change ingredients in those unhealthy snacks.

By not including any proposals to increase state revenues, Gov. Barbour is sticking to the GOP playbook of “Government is the problem --Don’t raise my taxes.” But this budget crisis is severe enough that, combined with the devastating farm losses throughout the state, it could send Mississippi’s economy back into recession. Our government should be better than that. It is time to look at the big picture and re-imagine what we expect from state government. There is another way, if only there are enough real leaders to champion it.
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Evans is a Jackson health care activist and writer.
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Copyright (C) 2009 by the Mississippi Forum 12/09

OHIO FORUM
By State Representatives Mike Foley and Bob Hagan

Ohio is a great, messy, complicated state. We are conservative and liberal, libertarian and socialist. We likewise have a whole bunch of moderates except for the host of issues on which they swing to the left or right. In the partisan parlance of the day, Ohio is a purple state. In a word, we are normal.

We have some real structural economic problems now, however. Problems we can only solve if we rebalance our politics and take some progressive economic actions.

First and foremost, we must deal with our budget or lack thereof. Since 2005, when Ohio enacted a dramatic tax cut, our economy has been headed for the train wreck where it ended up this year.

While Gov. Strickland should be commended for seeking a moderate solution, his hands are somewhat tied by the legislature in which we serve. Ohio needs a bold, progressive solution. In the past few years, all Ohioans have seen a dramatic reduction in the taxes people and corporations pay. This may seem popular, but these tax cuts have not only wrought enormous, unnecessary challenges; they have failed to produce any of the economic results which led to their original implementation.

The argument for these dramatic tax cuts was that it would stimulate Ohio’s economy; it did not. Rather, Ohio’s economy sank further, well before the current national economic troubles. In fact, were it not for the national crisis, Ohio would be in much bigger trouble than it currently is, thanks to federal “stimulus” funds.

We cannot make up for the harm of the 2005 tax cut policy, but we can stop it from causing further damage. We can bring Ohio back from the edge of greater decline. Rather than following the governor’s modest proposal, we should repeal much of the 2005 income tax cut and restore Ohio’s upper tax levels to those of 2005. The benefits from pursuing this policy are many. Don’t forget, the compromise budget adopted last summer left not only many people unhappy, it left far too many of our fellow citizens hurting even more.

The pain of the cuts enacted just 10 weeks ago is already being felt throughout our state. Among the Ohioans who lost out are our youngest and oldest neighbors and those most in need of help. From the Early Learning Initiative to adult protective services, programs and services geared to enable children to start school well-prepared and to ensure that the oldest among us are not abused have been eliminated and decimated by budget cuts.

Community mental health services were cut by nearly $200 million compared to spending last year. These cuts have occurred at a time of unprecedented need.

We cannot wait any longer for a bold solution. That solution is pretty obvious, it involves simply restoring tax rates for those earning more than $200,000 annually to the level prior to the 2005 cuts and creating a new tax bracket for those earning more than $500,000. Both rates are lower than the top tax rate for several years during the 1980s.

Certainly, those among us earning such high salaries at this time of crisis are willing to contribute just a little bit more, so that all of us can have a better future. One thing we know about Ohioans is that despite our flaws, we care about our state and each other.

Given our crisis, those who make more have more to contribute. They have done well by Ohio. It is not such a bad thing to require those who are doing pretty well right now, to help those who are struggling, by contributing more in taxes to the state.

We need adequate social services; we need good schools; commonsense development patterns; recreation centers and parks; clean drinking water and air; bridge inspectors; meat inspectors; colleges and universities; great transportation networks. The list goes on. But none of this happens without sharing the costs, burdens and opportunities.

We love Ohio. It has contradictions galore and a sense of absurdity that we adore. But we hate that amidst all of our history of innovation and hard work, the portion of us that is selfish has been encouraged and indulged by our state government for the last two decades.

We can extricate some of that selfishness from our tax code. It is past time. Having top income earners paying their fair share would provide Ohio’s bone-dry budget with an additional $1.4 billion just in this budget period. It’s the right thing to do.
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Foley is a state representative (D-District 14). Hagan is a state representative (D-District 60).
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Copyright (C) 2009 by the Ohio Forum. 10/09