STARKVILLE – How 2017 federal and 2016 state tax cuts impact Mississippians and the abilities of state and local governments to provide services based on the revenues available from future tax collections under those cuts are questions not yet fully answered.
But to make matters even more interesting, the long term impact of those federal and state tax cuts may well be significantly impacted by the outcome of a 2018 U.S. Supreme Court review of a 26-year-old ruling that the National Conference of State Legislatures predicts could have an over $26 billion impact nationally on state and local tax revenues.
How does that translate into Mississippi sales or use tax revenues at a time when traditional sales tax collections have shifted from reliable annual growth to a near flat-lining of revenues? In Fiscal Years 2016 and 2017, sales tax collections accounted for 38 percent of the state’s General Fund receipts as the State Department of Revenue collected $2.062 billion in sales taxes in FY 2016 and $2.055 billion in 2017. Twenty years ago, that percentage was 41 percent.
In 2016, Mississippi lawmakers adopted and Gov. Phil Bryant signed the “Taxpayer Pay Raise Act” – the largest single tax cut in Mississippi history. By the time the measure is fully enacted in Fiscal Year 2028, the state will be foregoing a projected $415 million per year less in tax revenues.
The ten-year tax cut is predicated on three primary strategies: Elimination of the state’s corporate franchise tax; elimination of the three percent individual income and corporate income tax brackets; and creation of an exemption of a portion of federal self-employment tax on the state tax filings of the state’s self-employed.
Supporters of the measure argued that the state tax cut would ultimately create a more business-friendly environment in the state and therefore attract new jobs and allows existing state businesses to expand. Opponents argued that cutting tax revenues would exacerbate ongoing budget cuts to education, public health, and other essential services.
State Economist Darrin Webb publicly panned the idea that over the course of the phased plan, new economic activity in the state will fill the revenue hole left by the cuts. But the proof of the wisdom or folly of the plan won’t truly be told until the phase-in of the cuts are complete.
Into that uncertainty came the 2017 federal “Tax Cut and Jobs Act” – the largest federal tax revision in decades – with the average American family projected to save $2,059 on their next tax return. There is also a 20 percent income tax deduction for most businesses and the act eliminates the alternative minimum tax on corporations.
But critics argue that tax cuts for low to middle income individuals are temporary, while tax cuts for businesses and corporations are permanent. The elimination of the Affordable Care Act is also seen as a longtime negative for paying for public health care in poor states like Mississippi.
Because state government in Mississippi helps fund local governments through sharing a portion of taxes collected, it’s important to remember that Mississippi counties heavily rely on property taxes since they don’t get a share of state sales taxes (18.5 percent of collections made within the city) as Mississippi municipalities do.
So while watching the impacts of 2016 state and 2017 federal tax cuts, Mississippi state and local governments are watching the U.S. Supreme Court for a 2018 ruling in the so-called Wayfair case. In that case, the court will review the 1992 Quill vs. North Dakota case, which held that states generally could not collect sales taxes from a seller that did not have a physical presence or “nexus” in that state.
On Jan. 12, the Supreme Court announced that it will hear a South Dakota case that could reverse the Quill decision and allow states to require all online sellers to collect sales taxes. South Dakota and 35 other states have asked the high court in South Dakota v. Wayfair to declare that the “nexus” or "physical presence" rule is outdated and punitive to bricks-and-mortar retailers at a time when Americans are increasingly doing their shopping online.
The outcome of that judicial review should be huge in Mississippi, a state in which about 38 cents of every state sales tax dollar collected is collected on sales.
10 comments:
The good peoples of Mississippi know better than any others that if you just stop taking all of massas money for gov'ment bull mess like education, he'd have more to spend and everybody would be better off. Why the scraps off his table would be ten times fatter if Gov. Phil and Tatter could cut the way they want to. It's called the "Rankin County trickle down" and it works! I've got a nice double-wide to prove it!
These commentary types are always concerned about govermnment "revenue." Do they even realize that this is money coming out of the pockets of working Mississippians? The government is not entitled to any more of our money. Mr. Salter would do well to remember that most people in this state care more about the money they get from their paycheck than they do "state revenue" or "services."
Salter clearly is a big government Republican and a mouthpiece of the establishment MSGOP. He and Crawford are cut from the same cloth.
Poor Sid, he should have known better than to try and warn them. These boys always shoot the messenger.
You jokers that keep crying about the government being too big, love chewing off the fat for free. This nation does not operate off of air and water?
The roads do not build themselves? This sh*t is not free?
Mississippians, like the people in this thread, would rather wait for the roof to collapse, instead of climbing up there once a year to make sure everything is intact.
The damn state's infrastructure is so damn depleted, that company's do not want to come here. The ones that have come here and capitalized on tax rebates to open shop, usually close up shop and file bankruptcy, costing the taxpayers more money.
Sid Salter and Bill Crawford aren't the damn problems, its the idiots the majority of citizens in this state keep electing office.
They take their walking orders from the Heritage Foundation, Americans for Prosperity, pass legislation for the shell company's those two PAC's have set up.
The supermajority has a better Ponzi scheme going than Bernie Madoff
Keep believing the Salter and Crawford are the fools, that's what they want you to do.
When is Sid going to write about Andy “all night long” Cannizaro?
Sid avoids the bubbling cauldron that is host to Cannizaro. The same cauldron that holds Keenum and his giant screwup in paying the abortion doctor to come to campus.
Wait, there's more that Salter wishes would not be discussed. No state flag on campus. Black alumni weekend (a giant exclusive, one-race house party).
If the posters over on the other page think McDaniel is an egomaniac....they've never met Salter.
Oh.
I see where Sid "Captain Obvious" Salter has returned.
Salter plateaued when he tried his hand at hosting a radio talk show. Molasses flowing uphill.
Great article , Sid and as usual, well researched and well thought out. And, as usual, it's clear you still put the best interests of Mississippi ahead of your own.
Alas, even when it's all about the math, too many have now been convinced that all government is bad and has no legitimate function other that defense and law enforcement.
They ascribe to " every man for himself" and imagine that a community should be able to build schools and roads themselves...the barn raising theory of the past. We built one room school houses and barns without government.
And, they believe the promise of future money is the same as having it in hand.
They believe helping business means business will save us and give sufficient amounts of their new profits to us in raises and new jobs so that we won't need government but will be able to fend for ourselves.
In economic and governmental history, this is an old story. It doesn't end well. In a democracy or republic, a vote becomes a show of support or loyalty and if lucky, the first Caesar or King or President is a benevolent dictator, but eventually a successor will not be.
History keeps repeating because so few see that it's really all about human behavior and that selfishness and greed are what we should be fighting as those are deadly human weaknesses of character that always lead to disaster.
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