Tuesday, May 22, 2018

Bigger Pie: Change Tax Code to Help Cities

The way to solve Mississippi’s problem with the struggling condition of its bridges is to adapt the state’s tax code to changing times.
When someone buys a good or a service from a brick and mortar store, the store collects the state’s 7 percent sales tax on behalf of the state. Some of that money is later sent back to municipalities.

If the item is bought online and the seller has a physical presence in the state such as a store, warehouse or office, the state assesses what is known as a use tax. It’s the same amount as the sales tax, 7 percent, but unlike the sales tax, none of it goes to municipalities. Most of it goes to the state’s general fund and last year that added up to more than $310 million.

In-store pickup of items bought online is considered use rather than sales tax even if the item is picked up in a store in the city where the tax was collected.

The problem for municipalities is that the future is in e-commerce. While sales tax collections have increased in the last five years, the use tax is the only tax revenue that’s increased consistently this year.

According to the U.S. Census Bureau, e-commerce sales have increased 33 percent over the last year. Since 2009, online sales have gone from just four percent of all retail transactions to 8.9 percent, a 50 percent increase in just under a decade.

The problem for Mississippi cities is that if the trend toward online sales continues, their ability to fund basic services will suffer. That includes water and sewer infrastructure, fire protection, roads, bridges, police protection, parks and other essential functions of government.

One of the chambers in the Legislature passed an solution that would’ve disbursed 30 percent of use tax revenue to cities and counties. The Mississippi House passed House Bill 722 in this past session unanimously, but the Senate allowed it to die in committee without a floor vote.

If the bill had been passed 12 years, ago, cities and counties would’ve received $512 million apiece. That’s an average of $42 million per year. While that won’t fix every substandard bridge or fill every pothole, it’s a start.

The first step to fixing the state’s bridge woes has to start with tax policy. Changing the law to disburse use tax revenue to cities and counties has to be the first step in a bigger conversation on how to modernize the state’s tax code.

A line in an old song rings true — “If you choose not to decide, you still have made a choice.” Choosing not to decide shouldn’t be an option for Mississippi policymakers when it comes to helping cities and counties amid a changing retail landscape.

This post is sponsored content provided by Bigger Pie Forum.


Anonymous said...

Good points, and I don't disagree. However, that use tax revenue went into the State General Fund and was spent somewhere. And Mississippi has struggled to meet its annual budget for several years. If some portion of the use tax revenue is pushed down to cities and counties, it will put more strain on the State budget. It's a zero-sum game.

The proposed concept and bill discussed above moves dollars around, but doesn't address the real problem - a shortage of tax dollars OR too much government spending.

Anonymous said...

There is no shortage of tax dollars.

Anonymous said...

It's an interesting problem, and I'm glad someone's out there thinking about the issue.

My primary concern is *which* municipality will be getting the cut for the sale in question? Will the municipality where I've made the purchase get a cut of the sales tax, or will the municipality where the warehouse/computer server is get a cut of the sales tax?

From where I'm sitting, I want my local municipality to get the lion's share of the funds. If the proposed plan does not do this, then it's not going to help my local municipality adapt to the 21st century economy. Any plan that doesn't lead to my tax dollars going to my local municipality is all hot air and will not get my support.

Anonymous said...

Government never has a tax problem, but they always have a spending problem.

Anonymous said...

I would rather my mayor had a say in how the money is spent vs. Philbilly and Tater extorting the General Fund for political purposes.

Anonymous said...

The answer to the problem is really a simple one.
Stop thinking up new ways to spend the tax money we do have coming in.
Stop wasting the tax money we have.

It is very easy to think up new ways to spend money if the money you are spending belongs to another person.

Anonymous said...

Would a reasonable remedy not be to increase the use tax rate (sharing everything in excess of 7%) to incentivize brick and mortar sales? Reapportioning the money will do nothing to solve the woes of Mississippi.

Perhaps, this solution might hinder growth in a state that is behind in the broadband game, but revenue is revenue. Think of it as a "convenience fee."

Good luck passing anything with that awful curse word - t@x - while Tate is still Lt. Guv.

Also, I appreciate the Rush lyric reference.

Anonymous said...

Laughed reading Jeff Amy's 'Goodbye Pat Robertson' puff piece this weekend when it was implied that the government should go on a hiring spree in order to fix PERS.

There is little doubt that the plan is to treat the symptoms, not the illness, until PERS goes terminal.

Anonymous said...

I pay enough damn taxes already !

Anonymous said...

Money is the mother's milk of politics.

Anonymous said...

I know this is a basic question, but where exactly is the waste in state government? I agree it exists, but are there a few agencies or bodies that outdo the others waste-wise?

Anonymous said...

Before any money based on new funding is passed on to counties for roads and bridges I want to see all supervisors in 82 counties to be audited. The audit to cover an extended length of time that provides how $$$ have been spent for ongoing expenses of roads and bridges not fish fries at election time. When supervisors from certain counties adamantly start deflecting blame for bridge closures without discussing solutions and putting nose to grindstone, I grow suspectful of them all. These guys blame Mitch McConnel and his wife or sue because they didn't take action before bewitching hour. Bare in mind bridge closings were no surprise. Doubt State Auditor Stacey Pickering is in tune with as his focus is most likely moving up the political food chain. Oh well!

Anonymous said...

Without question the most ignorant and CROOKED bunch in this state are the elected officials at the county level. I’ve worked with a high % of them over the years and have found only a handful to be honest public servants. The rest are self serving sicophants that should be investigated, tried and incarcerated.
Book it.

Anonymous said...


ALL OF THEM! Guarantee all private business owners could walk thru ANY state agency and find LOTS of places to cut! Their vision is different... both of them!

Anonymous said...

Riech wingers be all like:

A proposed solution for local government spending short on tax revenues doesn’t address the problem that government spends money, period. Government shouldn’t spend money. It should cease to exist and default on prior obligations so I can keep just a lil more of meh tax money. Meh knowledge of post modern capitalism in America boils down to meh greed and that’z all that mattahs. If’n the whole financial system collapses by my postionz rendering meh paper money useless, I don’t care. I gotz sum gold shillings, speculimate in crypto, and have it all figured out. By my own ignance, I am advocating for collapse and gotz dem MRE’s on standby along with a copy of the Anarchists cookbook. Have ya read dem Dere fedrhulist papahz?

Anonymous said...


because utopian ideals makes them feel better and they don't really have a grasp or understanding of the context

spews some nonsense trying to be offensively funny....

there's a label for that...

Anonymous said...

5:12 Do you also 'talk' to yourself? Appears you're trying to post a supporting comment to (yourself) at 4:26.

Anonymous said...

Not the same person, 5:41.

The reason I’m mocking these posters is that every time what’s considered a ‘voluntary’ tax is proposed to lift the non-voluntary tax burden, it’s shot down probably by the same individuals/posters.

Our politicians had to “unknowingly ��” sign a bill to authorize sports betting to enact some sort of voluntary tax on winnings rather than impose new taxes on everyone, and the details of all of that haven’t been sorted out yet.

2 prongs to modernizing Mississippi’s tax code: (1) slowly transfer imposed taxes to voluntary taxes where possible i.e. state lottery, etc where possible
(2) knock out corruption where it exists to make sure what taxes we pay, voluntary or not, are being spent wisely. Not on double dipping contractors and things of the sort.

Otherwise the same song and dance will continue and more bridges, roads, whatever will shut down and the core function(s) of government will be abandoned while we spend and insane amount of money on things like Medicaid, a government program that parades around as a viable option to health insurance for the impoverished.

I spent,
$168.00 on Amazon for Mother’s Day.
$19.16 on two day shipping to her house as I am not a prime member and barely use the online vendor except when I need bought items shipped to another state and I don’t feel like fooling with all of that.
$187.16 before taxes.
Estimated Tax Collected:
$18.25 (less than S&H)

Total = $205.41
Should “just the state” get the whole of $18.25 since Amazon is imposing taxes on sales anyway or should a city receive some of that ‘use tax’? Let me rephrase that question. Should counties be able to use some of that money to fix their shutdown bridges or not?

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