TAXPAYER PAY RAISE ACT HEADS TO GOVERNOR’S DESK
JACKSON – Lt. Gov. Tate Reeves said today Mississippi taxpayers are one step closer to seeing meaningful tax relief under legislation passed by the Senate today. The Taxpayer Pay Raise Act provides a $415 million tax cut over the next decade.
Senate Bill 2858, sponsored by Senate Finance Chairman Joey Fillingane, R-Sumrall, heads to Gov. Phil Bryant for consideration. Lt. Gov. Reeves proposed the bill over the past two years to reduce the tax burden on Mississippians and encourage more investment across the state.
“A flatter, fairer tax policy can grow the economy of our state and make Mississippi-grown businesses more competitive in the global marketplace,” Lt. Gov. Reeves said. “I am proud the Legislature has given Mississippians the opportunity to keep their hard-earned dollars in their pockets to spend at home.”
The plan includes:
*Eliminating the 3 percent tax brackets levied on income beginning in 2018. The bracket will be phased out over four years, providing individuals savings of up to $150 annually.
*Reducing the overall tax burden the estimated 160,000 self-employed Mississippians. Self-employed individuals will be able to deduct half of the self-employment taxes paid to the federal government by 2019. This includes a variety of sole proprietors such as lawyers, accountants, preachers, landscapers and child care workers.
*Removing the investment penalty, or franchise tax, on businesses’ property and capital. Over the next 10 years, this investment penalty on job creators will be phased out. Mississippi is one of the few states to have a franchise tax, putting the state at a competitive disadvantage when competing for jobs.
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. The plan will be phased in over a 10-year period, allowing the state’s economic performance to grow while reducing taxes.
Meanwhile, the Clarion-Ledger editorial board completely freaked out and went into hysterics with this front page editorial:
This headline was followed by an editorial printed on the front page - tactic that brings back shades of the old Jackson Daily News:
We are begging lawmakers and the governor, please — for the love of Mississippi — stop the madness. This isn’t hyperbole. We’re not being funny. We are completely serious. Please. Stop. The. Madness.
This legislative session has confounded a number of people as lawmakers have chosen to pass legislation pandering to different constituencies while ignoring serious issues like crumbling roads and infrastructure needs.
Over the weekend, the madness hit a fevered pitch. After agreeing to a budget that will provide deep cuts to just about every state agency and take money from the rainy day fund — actions required because of a lack of tax revenue — lawmakers have agreed to further cut corporate taxes.
This is unbelievable. Mississippi is broke, so the answer is to cut the sources of revenue remaining? Republicans and Democrats alike are questioning the wisdom of such irresponsible legislation, but legislative leaders continue to push forward.
House Ways and Means Chairman Jeff Smith, R-Columbus, basically is blaming the Senate, alluding to the fact that if it didn't pass the tax cut then the Senate — specifically Lt. Gov. Tate Reeves — would have killed all bond bills. It should have let him do it, if he thinks that is prudent. The fallout would be on him.
It’s not like the state is overspending. The recession saw to that first. Then, smart decisions by the Republican leadership that did not allow spending one-time money on recurring expenses has kept the state’s fiscal house in order.
No, Mississippi faces a budget disaster, in part, because of $350 million in tax cuts over recent years. That money is gone. Now lawmakers want to cut even more.
We were hopeful that any tax cut plans would not materialize this year. First, Gov. Phil Bryant signaled in his State of the State address that the current fiscal situation — he had just had to make mid-year budget cuts — meant any additional tax cuts were not prudent. Then, after the Senate passed a tax cut plan, the House gutted it — again saying current fiscal realities make it the wrong time.
The tax lawmakers want to cut is the franchise tax, a tax on the capital a company holds each year. It’s an unfair tax in many ways, and we support its repeal. However, repealing it should not be done in a vacuum. That revenue must be replaced some other place. And it should never — NEVER — be done when our state economy is shrinking, not expanding. (KF: The old dynamic v. static scoring debate.)
Reeves, the main proponent of pushing through this tax plan now, argues the tax cut will help spur the economy because corporations will reinvest that money and create jobs. However, history has shown us that this is unlikely, especially during uncertain economic times.
If you actually want to read the bill, click on this link and scroll down to the conference report.