Wednesday, March 9, 2016

Senate tax cut plan moves forward

Lieutenant Governor Tate Reeves issued the following press release:

Plan would boost GDP, increase investment in state

JACKSON – Lt. Gov. Tate Reeves said today his proposed Taxpayer Pay Raise plan to reduce individual and small business taxes will head to the Senate for consideration. 

The Senate Finance Committee approved Senate Bill 2858 today after discussing how the plan will allow Mississippians to keep more tax dollars in their own pockets, not in a government bank account. The bill, sponsored by Finance Chairman Sen. Joey Fillingane, R-Sumrall, is similar to a compromise plan presented in 2015 by House and Senate leaders. 

“Mississippi’s tax code needs to be flatter and fairer for both individuals and job creators to grow the state’s economy for the long term,” Lt. Gov. Reeves said. “We don’t need to grow the size of government; we need to grow the size of Mississippi’s economy. And we do that by allowing the taxpayers to keep their money to invest in their communities.” 

The $577 million tax relief plan includes:

  • Eliminating the 3 percent and 4 percent tax brackets levied on income,
  • Reducing the overall tax burden on small business owners, and
  • Removing the investment penalty, or franchise tax, on businesses’ property and capital.

Eliminating the franchise tax alone would have grown the state’s GDP by $282 million and added 3,514 jobs within 10 years, according to a Mississippi State University study. Reeves’ plan would be phased in over a 15-year period, making it a fiscally responsible approach to long-term tax policy and economic growth.


Anonymous said...

How is eliminating the 3 and 4 percent tax brackets going to save individual taxpayers money? Im assuming everything will be 5% now.

Anonymous said...

No, there are corridors. The first $X is exempted from taxes, the second $X is taxed at 3%; the next $X is taxed at 4%, and anything over that is taxed at 5%. So, you will raise the floor on what is taxed to only those things taxed at the 5% level.

Anonymous said...

2:35, I believe he means those paying only 3 or 4 % would no longer pay taxes and those in the 5% marginal rate would no longer pay the 3 and 4% rate. Still, seems not top be a good idea with our heavy state debt and pension obligations not being met. Just kick the can down the road until "I" get my political capital to run for Governor.

Anonymous said...

@3:13, that last part makes no sense. If this issue ha bad thing for the budget, how could it possibly help Reeves to, as you say, "kick the can down the road until [he] . . . run[s] for governor?"

Anonymous said...

@ 3:13, not to pick a nit, but the PERS pension obligations (as defined by PERS' Board) have been met for at least the past 5 years. It is certainly underfunded (by accepted pension and accounting principles), but the Legislature gives PERS what PERS says that they need. PERS should be developing a better plan to achieve acceptable funding levels.

Anonymous said...

I'm a Republican, and this is nuts. These people are fiscally-illiterate ideologues. Our state tax burden already is low. Nearly all the revenue we forego will flow directly into out-of-state corporations, not Mississippi businesses. The promised GDP growth simply does not happen. Similar plans have fiscally wrecked Louisiana and Kansas.

Aside from owing favors to rich people, why do Tater & Co. have such a hard on for destroying state universities, schools and roads?

Anonymous said...

Great news.
Now if he'd just say no to the MEC and their gas tax hike.
C'mon do it Tate. We got your back!

Anonymous said...

Obviously everyone wants to pay less in taxes but even this year there was a budget shortfall so why does cutting taxes make sense.

Anonymous said...

1) "Aside from owing favors to rich people, "

How many "rich people" will benefit from eliminating the 3%v rate on the first $5000 of income. Is that $150 per person/couple going to be spent on their next yacht?

2) The political advantage to Reeves is he can run claiming "I cut your taxes", which has a simplistic appeal to the financially innumerate. They will never make a connection between cutting revenue and wrecking to infrastructure.

Anonymous said...

only the most ignorant state could elect the mos ignorant politicians.

Anonymous said...

I think the Lt. Gov. forgot to disclose how much in state revenue that we are going to lose, or how the Mississippi Manufactures Association actually "supported" that study through MSU. The study can be found at Noticeably, it really provides no explanation as to how the calculations were made. However, even if the numbers were correct we would lose $242 million per year in revenue for the state, which means it has to come from somewhere else or other programs have to be cut. While jobs are predicted to be created, they will only add $14 million each year in state revenue by 2020. So the state is going to be short $228 million each year. While the study only makes predictions about potential jobs, it makes clear the loss in state revenue is a certain. Losing $228 million each year in state revenue is just our best option.

Anonymous said...

This makes sense. Next year my expenses will increase so I'm going to cut back to 30 hours a week and I'll earn less money. Yeah, that's the ticket!

Anonymous said...

Thank you Tate Reeves for actually working to achieve a conservative outcome. Our government needs to make do with less. Tons of boards and agencies and bureaucratic waste that needs to go. Yes, even the Dept. of Ed, Transportation, and Medicaid need to be cut. We have been fleeced for too long.

Anonymous said...

Got to love just footnote 1 from the MSU study. "The simulations do not impose a revenue-neutral or balanced budget constraint on state and local government budgets. Therefore, the simulations do not take into consideration any impact for increases in other types of taxes or reductions in government spending that may be adopted to balance any budgets as a result of revenue lost from eliminating the franchise tax." So in laymen's terms, this simulation does not predict reality. It does not predict the effect from having to raise taxes elsewhere to offset the loss in state revenue. Nor did it predict the loss of jobs and income if state budgets are cut shorter.

Jim Galloway said...

Louisiana cut taxes in the face of signs that revenues were decreasing. Sound familiar? Now Louisiana is in real danger of having to close post secondary schools, lay off State Troopers and teachers, all while reinstating some taxes that were foolishly cut. Reeves' tax cut bill is beyond stupid.

Anonymous said...


Where did you get that we will lose $242M per year??? The first year impact is $18M for the entire bill. I think you are talking about the Franchise Tax only, which is approx $242M over a number of years.

Anonymous said...

242 million is what state revenues brought in just on the franchise tax for one year. If you take that away that is a 242 million state revenue loss. There is only a 14 million gain in state revenue from the preject d job increase. How do you see only a $18 million loss?

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