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 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. 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 so-called “sin taxes.”
When it comes to casino taxation, a split takes place just as in gangster movies. 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 collect and fork over sales taxes at their restaurants and hotels and pay property taxes and other assessments and fees. 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 this year, the Mississippi Bureau of Revenue collected $4,370,960,019.
• 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 as follows:
• Five percent from use taxes.
• Four percent from tobacco.
• Three 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. 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 to 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.
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 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 dishonest to trot them out and pretend tweaking them will make a big difference in the state’s well-being.
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.
About the only “innovative source” this state has not yet tapped 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.
• Charlie Mitchell is assistant dean at the University of Mississippi School of Journalism.
