Revisionist history impedes reaction to Amazon sales tax decision
Published 11:22 am Wednesday, February 1, 2017
By Sid Salter
Much of the social media reaction in Mississippi to the negotiated decision by online giant Amazon to voluntarily collect and remit Mississippi’s 7 percent sales tax – technically a “use” tax – has been steeped in the revisionist history that this represents a Republican-led new tax or tax increase.
That is simply not true.
Let us take a little stroll down Memory Lane in Mississippi. First, let us stop in 1793 when the invention of the cotton gin allowed the production of cotton to supplant tobacco as the dominant cash crop in America. Even through the Civil War and Reconstruction, the South remained essentially a one-crop economy well into the 20th century.
In Mississippi, the reign of King Cotton first saw an end with the building of railroads around the turn of the 19th century and the subsequent development of the state’s timber industry. By 1909, the boll weevil had begun to do its thing in the Magnolia State to diminish cotton yields and profits.
Then came the devastation of the Great Flood of 1927 – followed soon by the Great Depression and specifically in 1931 by a dramatic drop in cotton prices.
The venerable book “Mississippi: The Works Progress Administration Guide to the Magnolia State” offers this account of how the collapse of King Cotton and other factors brought about the birth of the sales tax in Mississippi:
“In the late 1920s and early 1930s, the (state) budget could not be balanced. When, in January 1932, Sennett M. Connor (his name was actually Martin Sennet Conner) took office as governor, pledged to the passage of a sales tax, the deficit totaled $13,486,760. On May 1, the sales tax bill, providing a two percent tax on all purchases, became a law; and before the end of 1935, the deficit had been wiped out, with the State’s treasury showing a cash balance of more than $1,200,000.
“During the first two years of operation, the tax cost the average citizen approximately ten cents a month, though it increased the state’s income by 25 percent.”
The fact is that Gov. Mike Conner’s 1932 sales tax saved Mississippi government during and after the Depression. When Conner took office, the state auditor reported that there was a total of $1,326 in the state treasury and that outstanding warrants had been issued against that amount in the sum of almost $6 million.
Mike Conner was a great governor and one who almost single-handedly preserved “the full faith and credit” of the state of Mississippi during the Depression.
So the current caterwauling on both the far right and the far left in Mississippi over some supposed Republican conspiracy to enact a new tax or a tax increase based on the Amazon negotiation is, again, just not true. Sales tax has been a bedrock of Mississippi taxation since the darkest days of the Depression in 1932 – when Mississippi was literally too broke to pay its bills.
Nor is the full collection of Mississippi’s existing sales tax on online sales a “tax on the internet.”
What it is a realization that technology and shopping habits have changed, but those changes never relieved the bricks-and-mortar, mom-and-pop retailers of the responsibility placed on them by Mike Conner in 1932 to collect and remit sales taxes to the state – and certainly not in the way that online retailers now argue that they should not be able to avoid.
Sales tax evolved over the years. It increased and as it did, there were a growing number of sales tax exemptions. If there is an argument where online retailers might hang their hats in fighting the Amazon decision, that is the one.
However, with tax cuts in other areas in recent years and a strained state budget, it is unlikely that Mississippi will retreat from the decision to pursue full collection of Mississippi’s existing sales tax in a way that includes online retailers.
Sid Salter is a syndicated columnist. Contact him at email@example.com.