Taxes, Spending and Pay Raises
The Mississippi legislature is half-way through the 2022 legislative session which has proven to be a unique year in our state. We have emerged from the COVID “pandemic” and find ourselves with a surplus of over $1 billion in tax revenue sitting in the state treasury.
The big question, “What do we do with this extra money?”
When the legislature arrived at the capitol in January we were told by the state economist that there was no foreseeable end to this extra money, that the state could expect to collect more and more money every year. Some of us believe that is a foolish and dangerous statement. We know a large portion of this extra money is because of inflation, as prices continue to rise at unprecedented rates, the state collects more money. An example of that is would be if you spend a $100 on groceries the state collects $7, but if due to inflation those same groceries cost $150 the state collects $10.50. We all know inflation has to stop eventually or you will start buying less groceries. Either outcome means the state will collect less.
We also know that much of the buying that has taken place in the past year is due to the federal government printing money at an alarming rate and sending “free” money to citizens. This has already stopped to a large degree and will eventually prove itself to be unsustainable.
All of this means the extra billion dollars the state has collected is one-time money.
When deciding what to do with this money, there are four options that the legislature could choose.
Give the money back to the people
Pay down the debt
Option 1 – Give the money back to the people
Calvin Coolidge said, “Collecting more taxes than is absolutely necessary is legalized robbery.” This option should be the top consideration for anyone claiming to believe in conservative government. The Republican party platform says
“"Mississippi Republicans believe that people, not government, know best how to spend their own money. When people keep more of their hard-earned money, jobs and economic growth will flourish in the free market system."
Sadly, this option has not been considered by the Republicans in the Mississippi legislature.
Option 2 – Cut Taxes
Elimination of the state income tax is being considered, but the bill increases sales taxes to fund the reduction and eventual elimination of the income tax. This is actually a tax swap and not a tax cut. Elimination of the income tax would be great for the people of Mississippi but it should also cut the total money collected by the state.
Option 3 - Pay down the debt
The debt owed by the state of Mississippi has increased to more than $7 billion. The interest on this debt is almost $500 million/year. If we used the surplus to pay off our debt the state of Mississippi would have an extra $500 million every year. That would have been a responsible way to increase teacher pay. Even after the huge teacher pay raise the state would have had an additional $200 million/year to reduce taxes, increase other state employee pay, or give a portion back to the people. But instead, we will pay the $500 million in interest and add more debt to pay for pet project for legislators.
Option 4 – Expand Government
Unfortunately this is the direction the Mississippi legislature has decided to take. This option uses one-time money, the billion dollar surplus, on recurring expenses. This option increases government and dramatically increases the state budget by hundreds of millions each year. The legislature has passed pay raises for almost every government employee and even tried to give themselves a raise. This is the most irresponsible way to handle the extra money. By increasing the state budget, not paying down debt or lowering taxes, we have set up the people of Mississippi to fail. When the federal government stops printing money and stops sending “free” checks to our citizens the state will be left with no other choice but raise taxes to cover the increased budget.
It is not popular to be a fiscal conservative, but the money in the state treasury does not belong to the politicians. It belongs to the people of Mississippi and should not be used by politicians to buy votes and enrich special interest groups who donate to campaign funds.
The Mississippi Freedom Caucus has voted against every raise and every increase in our state budget.
We have voted NO because the Mississippi legislature has chosen the most irresponsible way to spend your money. The Mississippi Freedom Caucus is not against paying state employees a fair wage, but it should be done in a responsible way that benefits every taxpayer.
We take the responsibility of spending your money very seriously, we do not vote to enrich ourselves or to ensure our re-election. We do not work for the leadership in the legislature or the deep-pocket lobbyist. We work for the good of every Mississippian and will continue to do so every day.