CBPP/SPP Reports: Advancing Racial Equity through State Budget and Tax Policy

by Kyra Roby

One Voice, through its State Priorities Partnership (SPP) work, supports state budget and tax policies that ensure the economic well-being of all of the state’s residents, regardless of color.

The Center on Budget and Policy Priorities’ (CBPP) report “Advancing Racial Equity With State Tax Policy” describes discriminatory and racially prejudiced state and budget policy history. And CBPP’s report along with SPP’s report, “How State Tax Policy Can Advance Racial Justice”  proposes fiscal policies that promote racial equity.

Key highlights of the reports are as follows:

Mississippi’s budget and tax policy history

• During Mississippi’s 1980 state constitutional convention, the state instituted the nation’s oldest supermajority requirement―a law requiring a three-fifths majority vote in both houses of the legislature for all state tax increases. The purpose of this requirement was to disenfranchise the state’s black voters, increase power amongst wealthy, white landowners, and make public spending for schools and other services for black people more difficult to secure. This law remained in effect until Mississippians passed a ballot initiative during the 2020 general election removing the requirement.
• In 1932, Mississippi implemented the nation’s first modern retail sales tax. The tax helped reduce taxes for white property owners and increased taxes by black people who, with little property at the time, had few other items to tax. The tax also affected those with lower incomes because sales taxes generally take a larger portion of lower-income individuals’ money. Because the sales tax proved effective in raising revenue for the state, other states also adopted sales taxes soon after Mississippi.

Examples of other fiscal policies that reduce racial equity in states

• Gerrymandering that produces less people of color in state legislatures.
• Funding decisions that negatively and disproportionately impact black communities, such as school funding formulas and fiscal issues related to mass incarceration.
• Tax assessments that increase property assessments for Black property owners.

Ideological summaries and key findings

• People of color, by household, account for a lower percentage of the all of the nation’s wealth.
• People of color have a lower median net worth when compared to white households.
• Racial discrimination persists in the private-sector, including in housing and in the job market.
• Implicit biases persist across the public sector, including in states’ education and criminal justice systems.
• State and local tax policy is not race neutral.

Fiscal policies that promote racial equity

• Enact progressive tax systems that support requiring wealthier individuals to pay their fair share of the state’s tax burdens.
• Introduce or expand low-income tax credits, such as the Earned Income Tax Credit.
• Eliminate fines and fees as a revenue source for courts and reform policies affecting the criminal justice system.
• Invest in services and programs that raise revenue.
• Eliminate subsidies and require corporations to pay their fair share of taxes.
• Modernize the state’s sales tax.
• Reject legislation resulting in ineffective tax breaks.
• Restructure rules concerning the state’s “rainy day” funds.