‘Sinners’ supplement state, but only slightly
Published 12:01 am Sunday, January 30, 2011
OXFORD — State Rep. Bobby Moak, D-Bogue Chitto, says it is not going to happen. He chairs the House Gaming Committee, so that’s that. Owners of casinos licensed by Mississippi are probably more than a little antsy nonetheless.
“It” is a tax increase.
Normally, the t-word is not spoken in an election year, but gambling (along with tobacco, alcohol and assorted other vices) can be exceptions to that rule. The reason is as simple as the adage, “Tax man, Tax man, don’t tax me. Tax that man behind the tree.” The masses don’t care about taxes we believe only other people pay, especially when it comes to the so-called “sin taxes.”
The reality of casino taxation is that a split takes place just as it did in gangster movies. So far as I know, fedoras, briefcases and James Cagney are no longer involved. Just keyboards, computers.
Still, “The Man” shows up at a regular time each week and doesn’t leave until he gets 12 cents of every dollar a gambler has lost at a slot machine or table game. The state keeps 8 cents flat-out, splits another .8 percent with the city and county where the casino is located and rebates the remainder, 3.2 percent, also to the city, county and school district where the gambling is licensed. (Some jurisdictions vary from this formula, but it is pretty much the norm.)
Casinos also fork over sales taxes at their restaurants and hotels and pay property taxes. They are exempt from the Mississippi corporate income tax in deference to the state’s 12 percent take off the top.
The notion of muscling more from casinos arose this year with a dubious rationale.
The rumble was that some states with fewer square feet of space licensed for gambling receive more revenue per square foot. That’s kind of like saying one farmer should pay a higher tax if his crops don’t do as well as his neighbor’s, but whatever. Moak has told reporters it’s a no-go. So it’s a no-go.
The larger issue is the false impression created every time moths start flying from the state’s wallet and lips start flapping about where the state can get more money.
The sin taxes are always first up, but let’s look at their impact:
• To be applied toward state operations, the Mississippi Bureau of Revenue collected $4,370,960,019 in the year that ended last June 30.
• Eighty-one cents of every dollar in that $4.37 billion total came from the general sales tax (41 percent), state personal income tax (31 percent) and the corporate income tax (9 percent).
• Nineteen percent came from other taxes, the sin taxes and what could be called hidden taxes.
• 5 percent from use taxes.
• 4 percent from tobacco.
• 3 percent from insurance premiums. (Most people don’t even know there’s a tax on insurance premiums.)
• 3 percent from gaming.
• 1 percent from alcohol sales.
• 3 percent from everything else.
Now let’s look at the other side of the ledger and one of the state’s small but significant spending categories. The most recent figures from the Legislature’s own number-crunchers show taxpayers spending $41.27 per day for the average inmate plus another $7.57 to repay prison-related construction loans. For this year, the state has allocated $333 million for the Department of Corrections.
Not counting collections diverted to a bond fund or rebated to state and local governments, the state’s net from casinos (that 3 percent) was $155 million.
In context what that means is that all the revenue taxes collected from all the state-licensed casinos in Mississippi covered less than half the annual cost of prison operations.
The point here is not that ancillary taxes are unimportant and don’t help pad out the public purse. The point is that these taxes make fractional differences in the big picture. It’s disingenuous to trot them out and pretend tweaking them will make a significant difference in the state’s income.
Commerce is the engine of employment and commerce and employment are the engines of public revenue.
This state and others should be grateful to get a cut when “sinners” drink, smoke and gamble, but it sure would be nice to hear legislators talk more about bold and innovative steps to support the private sector and less about “adjusting” minor revenue sources.
The pattern here is familiar, or should be. About the only “innovative revenue stream” this state has not yet created is a lottery. The story, however, is the same in states that have. Legislatures almost immediately find a home for every penny and in short order start looking for more.
There are no secrets to public finance. When the economy is strong, the treasury fills. When the economy is weak, it’s illusory to think sinners and other special taxes can fill the gap.
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Charlie Mitchell is a Mississippi journalist. Write to him at Box 1, University, MS 38677, or e-mail cmitchell43@yahoo.com.