About 45 years have passed since a U.S. state last eliminated its income tax on wages and salaries. But with recent actions in Mississippi and Kentucky, two states now are on a path to do so, if their economies keep growing.
The push to zero out the income tax is perhaps the most aggressive example of a tax-cutting trend that swept across states as they rebounded from the COVID-19 pandemic with surging revenues and historic surpluses.
But it comes during a time of greater uncertainty for states, as they wait to see whether President Donald Trump’s cost cutting and tariffs lead to a reduction in federal funding for states and a downturn in the overall economy.
Some fiscal analysts also warn the repeal of income taxes could leave states reliant on other levies, such as sales taxes, that disproportionately affect the poor.
The two poorest shittiest states are about to pull yet another “let’s fuck over the poor”, color me surprised
These states would cease to exist the second California would secede as these “no handouts for anybody!” states 100% dependn handouts from states that actually make money
But nothing to see here, just keep on going like this, it’s all fine
Residents are gonna learn a lot about who pays for roads and pipes and wires and hospitals and fireman and popo and …
I’m concerned, for sure.
For Kentucky, I think this will probably kill their state healthcare program, which is incredibly popular from what I’ve heard.
Anyways:
Is ‘Own your vote’ a sufficiently snappy analog to ‘Act your wage’?
Yeah, I think that works well. I like it.
Mississippi is among the most impoverished states and relies heavily on federal funding. Democratic lawmakers warned the state could face a financial crises if cuts in federal funding come at the same time as state income tax reductions.
Hey Mississippi, that federal funding is what DOGE is frequently classifying as “waste, fraud, and abuse”. You might want to wait until you see the smoking crater the trump administration will leave for federal funding for states before you cut off your locally controlled income source.
This kind of message might possibly work…if their education system taught how to read.
Kentucky’s bourbon industry is now utterly fucked from inevitable or already declared retaliatory tariffs…
Time to lower the state’s tax revenue even more!
Half of Kentucky’s bourbon is exported, and Kentucky makes 95% of the bourbon in the world.
It is a major segment of their economy, and now half of it is in extreme danger.
So of course, with that ongoing disaster… it is now time to eliminate income taxes… and presumably make up the difference with sales and/or property taxes?
… Roughly 35% of Kentucky State Government inflows come from its income tax, about 5% comes from property taxes, most of the rest is sales tax.
If they just removed the income tax, they’d blow through their entire state savings/trust fund thing in 2 or 3 quarters, if they didn’t pull in additional revenue from elsewhere or just lop off about a third of their spending… which mostly goes to funding schools, paying teachers, and funding medicaid.
Just a bunch of geniuses over there.
‘Man of Constant Sorrow’ indeed, fuck.
Or maybe it’s a 5D play. If the economy collapses in that time, their state will be in a better position
Sorry, I only inhabit 3 dimensions and change through time, can you explain this 5D logic to me?
What good is a rainy day fund if the dollar becomes worthless?
If you’re sure it’s about to crash, the smart thing to do is spend it all beforehand
I mean… I may be wrong about this, but I think its just a gigantic pile of cash.
Its a revenue budget surplus, not like a … state version of a soverign wealth fund.
Can’t be legally ‘invested’ in anything. It’s just locked in as giant pile of cash, with no interest rate, no ability to invest it in one thing or another. Only either do nothing, or spend it on government costs.
You are basically saying ‘spend all the money now, because prices will be much higher later’.
But uh… if they just… you know…didn’t wipe out a progressive income tax source of funds… that is you know, ongoing, a flow, not a static total…
The state would yes, still have to cope with rising general costs… but this would be augmented by that flow of rising amounts of tax revenue.
If your scenario is agnostic massive inflation, that the dollar goes down in value generally, then it would be much better to keep the flow going, as that will be balanced on both the spending and revenue side by whatever the inflation is.
The inflation would increase both state budget costs and state budget revenues from taxes, as both incomes and sales prices would rise, thus so would income and sales tax revenue.
And then in that scenario, yes, still use the static pool of reserve cash to shore up irregularities in that flow, maybe to help subsizide at a state level some of the rising consumer price burden, or maybe sure, spend it all at once to try to build some kind of massive infrastructure project that generally supports economic activity, or start giving it out as small business grants, or start a state backed entity to provide some kind of locally sourceable vital staple consumer good.
But you can do all that without massively destabilzing your state budget flows by cutting out the income tax revenues.
It is not a 5D move to stop inhaling a third of the oxygen you normally breathe before you use your reserve of calories from eating breakfast to fuel you to go run a mile.
You could… just use those deposited breakfast calories to run a mile… and keep breathing normally the whole time. That’ll probably result in a better mile time.
Saying someone is doing a 5d chess move is an over-exaggeration of saying they did a 3d chess move, which means to do something that seems incomprehensible at a glance but makes total sense to someone who understands the rules.
The joke is to insist that if you understood the reasoning, it’s actually a brilliant move. But it’s 5d chess, a game that doesn’t exist (and 5d chess with multiversal time travel isn’t really 5d chess, despite the name)
Kansas tried something similar and it was such a disaster the Republicans had to repeal it themselves.
I don’t think the story will end well in Kentucky of Mississippi but Kansas had some existing problems that often get tied-in with Kansas’ tax reduction.
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The people writing the checks for government expenditures were not following the budget submitted by the legislature. There was literally someone cutting checks based on what he felt was good policy. For years and years. He died. We only figured out the problem after he died and it turned out he was giving schools and school transportation a lot more money than he was supposed to. The Legislature would have made different spending decisions had they correct information abut the state of the budget. Massive oversight on the part of several administrations.
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Kansas has poorer farmland than Iowa & Nebraska. Kansas has less oil than Oklahoma. And Kansas doesn’t have tourism like Colorado. Relative to our neighbors, we will continue to get poorer and poorer. The economic engine of Kansas (Kansas City) is split between two states and the “border war” frequently results in business playing both sides off each other until they get a deal so cheap that neither side should make the offer.
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Kansas City is the economic engine of Kansas. The tax cuts reduced government spending (mostly school spending) in rural parts of the state. The tax savings was pocketed in a city where a lot of the money walked across the border. The overall state couldn’t make-up for what was being lost through that siphon but this may be a problem dissimilar to other states.
All that said, I do think good public policy is to have a wide but shallow system of taxation. Meaning that a state uses every type of tax (income, sales, property, estate, capital gains, etc.) but also tries to keep each tax relatively low so that the tax itself does not become the source of economic disruption. I feel like states that take one tax to zero but make it up with another tax are making things worse.
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Turns out there are public services even Republicans still want. And you don’t please your base voters by bankrupting police departments and rural school districts.
Still, this is all contingent on some degree of democracy. If we’re just an oligarchy with a Two Minute Hate channel attached to it, we’ll get tax cuts followed by excuses. Blame the Haitians eating the dogs and the cats. Blame the mayor for killing peanut the squirrel. Then sit back and wait for the controlled opposition party to apologize for only half agreeing with you.
They’ll straight up disband public schools and all other public benefit before they defund police.
Jokes on them. If they cut tax revenue without a plan to cut costs, they’ll waltz right into defunding the police without even meaning to.
police is only useful to them, asa bludgeoning device. dictatorships have a strong police force, while makign thier own military weak, its by design.
Also, I suppose one way to get cars off the roads is to leave them in such severe disrepair that nobody can drive.
Can’t drive if you can’t afford fuel
Fuel is, curiously, the one thing we’ve managed to get cheap.
The rest of the economy is inflating like a blimp, but gas prices are as low as they’ve been in decades
For now; it’ll become an issue as the refineries start needing maintenance and all the parts and equipment have gone up in cost
The most eloquent description of the south I’ve heard recently.
AND THATS why they also have a dem gov, because they cant take the blame for everything, so they allowed a Dem to becom one of the state.
Mississippi and Kentucky are just welfare queens who need to pull themselves up by their bootstraps.
More than just them.
Your graph has no labels
Well, from context it should be pretty clear. Sure, you’d need labels if you’re submitting it for a formal paper or something, but for a comment on Lemmy, seems pretty…I don’t know…petty.
This graph can mean anything.
It’s really fuckin cold in blue color States and hot like the devil balls in all red color states?
I think it is a map showing states that take more in federal money than they pay in federal taxes vs states that take more money than they pay back in taxes.
I’m in KY. I’ll save like 12 bucks.
I’m also in kentucky. I may save $25 but that’s only because of my investments that aren’t much and are getting smaller by the day.
Hello, fellow right-wing shithole occupant
Winning! They will be doing even less for their people.
Joining the ranks with… Washington state?
Recently though, Washington finally passed a Capital Gains tax, still no conventional income tax, though. Washington has one of the most regressive tax structures in the country for being otherwise so progressive.
Sales tax suck here in Washington, we’ll and so does property taxes. I’m paying $9k property tax for a house that I bought in 2020 for $605k that’s now valued at $850k. I went from $3k to $9k in property tax in 5 years. I’d willing do a mix tax because we have a fuckton of million and billionaires and 10.6% sales tax on everything fucking sucks.
Washington state is basically a wonderland for giant megacorps hiding under a trench coat that’s made of rainbows and gentrification.
MSFTs main campus just literally is the size of a city.
They literally have their own private bus system that gets employees all around the Seattle/Bellevue/Redmond region to and from their main , city sized campus, if not other campuses as well by now.
Boeing cannot be allowed to fail or even held accountable no matter how much and how hard they fuck up… because manufacturing jobs and national defense.
Amazon just bought a huge chunk of Seattle, basically downtown Seattle, and owns nearly every building in… something like an 6 block by 6 block foot print.
The most actually progressive thing about the state’s economic structure is that it gets a huge amount of its power generation from dams, actual renewable energy, has very good water management, and comparatively good public transit for the population size of its cities, at least compared to other states. Yay light rail, but also Seattle is one of the hilliest cities in the country with extreme grades and elevation changes, so uh, good luck commuter bikers.
But uh yeah, cost of living is insane, housing prices are insane, and so far nobody seems to have any actual plan to address that beyond subsidizing a few extra hundred apartment units a year in Seattle such that they’d be affordable to a family making 90k a year, when they’d normally only be affordable to family making 140k a year.
When Seattle says they’re making ‘affordable housing’, that means affordable to median wage workers… not affordable to the … something like 40% of the population that is moderately to significantly poor.
You could completely solve homelessness in the state with something like a 0.5% tax on revenues of the top 100 corps by revenue in the state.
No one has ever even proposed anything like this, to my knowledge.
Mississippi and Kentucky
Guess they aren’t fans of clean water or driveable roads.
MS is already near the bottom for clean water. Surprisingly, KY is near the top. But I expect that’ll change.
Word around town is that these two states would easily qualify as “shit hole countries” if they weren’t attached to the USofFuckingA.
Sales and income taxes should both be reduced, honestly. Maybe not eliminated, but reduced. Then again, I also think that wages for elected officials should be cut - every elected American should be paid the median wage of their constituency. You want to be paid more? Do something to improve lives.
they are doing this when the federal government is slashing disbursements to the states, especially the funds that those very same southern and very republican states rely on.
i honestly hope they do it. because it’s going to jack up property taxes and sales taxes to sky high levels. you thought southern states were old and homogeneous now. wait until the next generation can’t afford housing, can’t pay for the basics, can’t even find poor poverty wage jobs, and have no social safety net to catch them because social safety nets is soshulizm and communust.
