What happens when you can’t raise taxes

at 06:31 PM ET, 03/16/2011

Andy Kroll fact-checks Gov. Haley Barbour’s claim that “we” — meaning Mississippi under Barbour’s leadership — “dug out of a $720 million budget hole in two years without raising anybody’s taxes.” As it turns out, Barbour raised all sorts of taxes during his time in office: He created an excise tax on cigarettes and then raised it, increased taxes on hospital beds and businesses that lay off workers, and tried and failed to pass a new tax on hospital revenue.

I don’t really care whether Barbour is a hypocrite. What’s interesting about this is that it’s a window into the sort of policies that Republican executives resort to when they decide that transparent, broad-based revenue measures such as income and sales taxes are off the table. Barbour, to keep people from noticing his tax hikes, ended up passing some fairly regressive, narrowly targeted, economically inefficient taxes. He still had to raise taxes, but he ended up doing a worse job of it. And as Kroll goes on to note, because you can’t raise all that much revenue by taxing hospital beds, Barbour had to make extremely deep cuts in public services such as education. Mississippi ranked 48th in Forbes magazine’s list of “best states for businesses and careers,” and Barbour’s decision to cut education funding by $520 million probably isn’t helping his state develop the sort of skilled workforce it needs to lift its position in those rankings. But it is helping him run for president. That’s not a great incentive structure.

 
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