In student loan argument, Gov. Reeves ignores Mississippi’s federal dependence

by Bobby Harrison, Mississippi Today
August 28, 2022

Gov. Tate Reeves took to social media recently to ask “why does the Democratic Party hate working people so much” after President Joe Biden announced his limited student loan forgiveness program.

The first term governor surmised that the tax dollars of working Mississippians would be used to pay off the student loans taken out by “Harvard doctorate degree gender studies majors living in California.”

Individuals earning less than $125,000 or $250,000 for a family can have $10,000 of their student loan forgiven under the Biden plan. People who receive Pell grants (which provides financial help for the needy for undergraduate studies, not Harvard doctorate degrees) can get up to $20,000 forgiven.

People who attended college, but dropped out, perhaps due to financial hardships, can take advantage of the loan forgiveness. Those people certainly are not Harvard elites and are probably the working people the governor cited as being treated unfairly by the loan forgiveness.

Still, the governor makes a good point.

Under our system of government on the local, state and federal levels, people pay taxes for what is considered the greater good of the government and of society.

People who don’t have children in public schools pay taxes because it is a benefit to society to have a good educational system. People pay taxes for restaurant inspections whether they eat out or not.

The list could go on of services that taxpayers pay for whether they use them or not.

Working Mississippians also are paying their taxes for Medicaid expansion. But since the governor steadfastly refuses to allow the state to expand Medicaid, the Mississippi tax dollars are going to the other 38 states that have expanded Medicaid to provide health care insurance to primarily the working poor.

The tax dollars of working Mississippians also are going to help pay for rental assistance in other states since the governor is ending the state’s participation in an emergency rental assistance program designed to help the poor and those impacted by the COVID-19 pandemic. The governor will be sending more than $100 million in rental assistance funds back to the federal government.

But Reeves nor anyone else should be too concerned about Mississippi taxpayers subsidizing people in other states – those Harvard elites or anyone else. By multiple measurements, Mississippi is the beneficiary of federal tax dollars, not the subsidizer.

Mississippi ranks sixth nationwide in terms of federal spending per resident at $6,880, according to a 2022 study. Virginia, home to a large percentage of the federal work force, ranks first at $10,301 per resident, followed by Kentucky, New Mexico, West Virginia and Alaska.

New Jersey is last in federal spending per resident at a minus $2,368, followed by Massachusetts at minus-$2,343. California, the state where Reeves was afraid Mississippi tax dollars would go for the Harvard elites, garners minus-$12 in federal spending for each resident.

Using a different measurement — return on tax dollars — Mississippi gets $3.40 for each tax dollar sent to the federal government, according to a 2020 report. In that study, Mississippi trails only New Mexico, which gets $4.33 for each dollar it sends to the federal government, and West Virginia, which garners $3.74 for each dollar it directs to the federal government.

New Jersey gets 78 cents for each dollar its residents provide in federal taxes. The other states that get less than a dollar for each dollar sent to D.C. are Nebraska, Washington, Minnesota and Illinois.

Mississippi gets more federal spending than most states in part because it has the highest percentage of people living in poverty who qualify for various federal programs. Mississippi also has multiple federal military bases. Many, but not all, of the state’s farmers also are big winners in terms of federal subsidies.

The taxing system is set up to send funding to programs that political leaders believe are good for the betterment of the nation, state or local government. A big part of the nation’s political discourse centers around what those programs should and should not do.

But regardless of that discourse, Mississippi has and will continue to be a winner in terms of the federal government providing tax dollars to the state despite the Biden student loan forgiveness program.

If Reeves really wants to stick to those other states and those elites by taking more of their tax dollars, all he has to do is expand Medicaid.

That decision would provide Mississippi about $1 billion per year in additional federal taxes.

This article first appeared on Mississippi Today and is republished here under a Creative Commons license.