What would Reagan do? Update from the Mississippi Center for Public Policy

When Reagan spoke that day, he was not only launching his presidential campaign, ‘The Gipper’ was beginning the process of American renewal. Under his leadership, years of decline and drift were over. The American Republic – and the wider West - recovered.

A key pillar of the Reagan platform was tax cuts. Under him, conservatives recognized that tax cuts are not only the key to electoral success. Lower taxes are the key to economic recovery.

Reagan’s tax cuts in the early 1980’s triggered a period of massive economic growth and dynamism that was to last well into the 1990s. When Bill Clinton balanced the federal budget in the 1990s, he was able to do so because of the surge in tax revenue that Reagan’s tax cuts had generated (See Art Laffer for details).

As I listened to the recording of Reagan at Neshoba, I wondered what would he think about the proposal to abolish the income tax in our state today? I have no doubt he would be enthusiastically in favor.

Reagan famously said that ‘whenever we lower the tax rate, our entire nation is better off’. When we abolish the state income tax in Mississippi, the entire state would benefit.

Ronald Reagan was so determined to push through tax cuts that he was prepared do so even if that meant running a deficit. There is no question that he would support income tax reduction when there was a massive surplus – as there is in Mississippi today.

“Government does not tax to get the money it needs” observed Reagan. “Government always finds a need for the money it gets”. Indeed. There are some politicians in our state today who eye the billion dollar surplus we have with a view to finding new needs for it.

At times it sounds as if those that oppose the House income tax elimination plan would prefer to expand the administrative state in Jackson ahead of giving taxpayers back their money.

We all know that prices are rising rapidly on everything from gas to groceries. Politicians wanting Mississippians to have more money in their pockets should start by not taking money out of their pockets. Stop taxing the first $25,000 of income ($50,000 for couples) right away.

The latest version of the income tax elimination plan the House has put forward would provide immediate help to every Mississippi worker. It is fair and affordable. As Reagan understood, it will generate economic growth and dynamism.

Of course, back in 1980, when Ronald Reagan advocated tax cuts there were no shortage of those – even within his own party – that lined up to explain why government should spend the money instead.

Like the crowd of Mississippians that cheered Reagan, most Mississippians today know that they are better at spending their own money than any politician in either Washington or Jackson.