How the South taxes

at 11:31 AM ET, 03/31/2011

A few weeks ago, Andy Kroll caught Mississippi Gov. Haley Barbour saying he’d “dug out of a $720 million budget hole in two years without raising anybody’s taxes.” The problem? Barbour had raised a couple of taxes. But give him his credit: He hadn’t raised income taxes. Rather, he’d raised cigarette taxes and taxes on facilities for the mentally disabled — taxes, in other words, that fall fairly regressively.

Turns out he’s working in a time-honored tradition in the South. This graph comes from a presentation I saw for the book “Taxing the Poor.” It shows how state and local tax revenue varies by region. Note the difference between the South and the Northeast:

As you can see, the South relies much more heavily on sales taxes and much less heavily on income taxes than the Northeast does. Sales taxes, of course, are regressive, while income taxes are progressive. Here’s what this means for a family of three at the poverty line:

Being anti-tax doesn’t mean your state doesn’t need revenue. Instead, what it often means is that the composition of how you get that revenue ends up being more regressive. You tax goods more than incomes, slap higher user fees on the sorts of public services (buses, parks, libraries) that the poor use more than the rich, and generally try to raise money in ways your wealthier, more politically powerful constituents don’t notice.

 
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