American Forum

MISSISSIPPI FORUM

By Ed Sivak

The governor’s office projects that state revenue estimates will fall $1.2 billion short of what the state needs this year. This means that Mississippi will have significantly less money than in past years to educate children, train the workforce and maintain the roads and infrastructure that foster economic development.

The magnitude of the crisis requires a balanced approach that includes raising revenue to keep the state from moving backwards. Three revenue raising recommendations offer a starting point for helping to solve this problem. The recommendations would produce much needed funds while allowing Mississippi’s tax structure to keep pace with advancements in the global economy.

First, modernize Mississippi’s sales tax to reflect today’s purchasing habits. The sales tax was designed during the Great Depression to provide the state with revenue based on what people bought. Back then, people spent most of their money on things, rather than services. In recent decades, however, the share of spending that households devote to goods has declined. And what households spend on services -- many of which didn’t even exist during the Depression -- has increased. The shift not only costs the state money, it also sets up some imbalances that work against middle-income people. For example, if one buys a lawnmower in Mississippi to cut his or her grass, they pay sales tax on the purchase. If one pays a lawn service, he or she does not pay the tax.