Wednesday, February 9, 2022

Sid Salter: Origin of Budget Surplus Lost in Legislative March towards Massive Tax Cuts

 Is Mississippi on solid fiscal footing for the future as the Republican leadership of both houses of the Mississippi Legislature take slightly different paths in their march toward a massive tax cut?

As in most matters of politics and public policy, the answer to that question depends on who is providing the answer. The Mississippi State Senate and the State House of Representatives have offered competing plans to accomplish a large (the House says they are offering the largest single tax cut in state history) and enduring tax reduction.

The Senate plan offers a recurring tax reduction of $316.6 million by 2026 and a one-time tax rebate of $130 million for a total of $446.6 million, according to preliminary estimates provided by the Legislative Budget Office and Mississippi Department of Revenue. The plan greatly reduces, but does not fully eliminate, the state income tax.

The House plan is designed to fully eliminate the state income tax and like the Senate plan also provides some relief on the grocery tax and car tags. The House plan would phase in a grocery tax reduction to 4 percent but would carry with it an overall 1.5-cent sales tax increase. The Senate plan would lower the grocery tax to 5 percent but carries no sales tax hike proposal.

The House plan would provide a 50 percent car tag tax credit for the total cost of the tag. The Senate plan would eliminate the state car tag fee, which represents between $12.75 and $14 in savings per tag.

Pro-tax cut voices from the political right like Douglas Carswell of the Mississippi Center for Public Policy greeted the competing tax cut proposals with praise: “We welcome the proposals outlined in the Senate today to cut taxes in Mississippi. Reducing grocery taxes from 7 percent to 5 percent, a one-off tax rebate and the elimination of the 4 percent income tax bracket over four years would help local families. With two different tax reduction plans now being proposed, one from the House and the other from the Senate, it is important that we find common ground. Unless there is some meeting of minds, neither plan will happen.”

The National Federation of Independent Business, while clearly favoring the House version, also praised legislative efforts to curtail or eliminate the state income tax: “Eliminating the individual income tax would have a big impact on Mississippi’s small businesses because many small businesses in the state are organized as pass-through entities and pay taxes at the individual rate. 

“Eliminating the individual income tax would free up funds that owners could use to add jobs, increase wages, and expand their businesses.

But other voices, like the left-leaning Washington-based Institute on Taxation and Economic Policy, panned both proposals as ignoring the source of the state’s budget surplus as primarily one-time federal funds and as policy that helped the wealthy at the expense of lower income citizens. ITEP state policy analyst Kamolika Das wrote:

“An egregious example of short-sighted tax-cut fervor happened last week in Mississippi. The House passed a bill that would gradually eliminate the state income tax, increase the general sales tax by 1.5 percent, reduce the sales tax on groceries from 7 percent to 4 percent, and cut the car tag tax. Altogether, the proposal would cost the state more than $1.5 billion in revenue and lavish most of the benefits on the wealthiest residents.

“House leadership has tried to frame the proposal as a benefit for low- and middle-income residents because it includes a grocery tax cut, but when taken together, the bill increases taxes for the state’s lowest earners and seniors on fixed incomes while saving wealthy households thousands of dollars.

“Not only is the proposal deeply inequitable, but Mississippi also simply cannot afford it. Lawmakers are nonsensically trying to use a one-time surplus (thanks to federal aid that was intended to help low-income communities weather the pandemic) to make long-term, structural tax changes that will perpetually widen the economic gulf,” Das concluded.

The GOP super majorities in both houses of the Legislature line up for the tax cut to pass in some form. But this issue will produce an important and closely watched conference committee process.

Sid Salter is a syndicated columnist. Contact him at sidsalter@sidsalter.com.

27 comments:

Anonymous said...

What Sid fails to understand is that this is Step 1 for cutting off the freeloaders. I am so sick of watching EBT shoppers eat better than me. And too many of them aren’t even citizens. Well I guess the anchor babies are technically citizens but they aren’t eating that steak. Their illegal parents are eating it.

Anonymous said...

8:18 : In to deep. Pipe dream.

Anonymous said...

Two points: First, this "surplus" will evaporate like flatulation in a whirlwind. Second, I'm all for eliminating the state income tax, but don't be fooled by the reason these legislators are giving us. They tell us that MS is being held back compared to surrounding states that have no income tax. MS is being held back alright, but it has less to do with the income tax than it does with other issues for which there is no solution. MS was born with certain ugly features that, not unlike a human, are here to stay and there is little that can be done about them.

Anonymous said...

The state government, instead of using the government aid that is an irregularity that has resulted in us having a huge surplus, to shore up education and infrastructure, is using it politically to gain votes and when this irregular aid dries up, and our coffers are empty, we will look like some version of Kansas or Illinois. There are those of us in the middle that can actually see the writing on the wall. What the heck happened to conventional wisdom? We aren’t Florida or Texas. We aren’t going to be Florida or Texas. We need to re-examine what it means to be Mississippi and work to be a strong version of Mississippi. For heaven’s sake, we need better leadership. I don’t know if we deserve it, but we need it. It isn’t to be found on the far right or on the far left either.

Anonymous said...

Zzzzz

Anonymous said...

The majority of democrats here pay zero state income tax.

Anonymous said...

It literally can’t get worse in Mississippi. We are already the #1 welfare state in the nation. The way I see it, the DNC will ensure that the local democrats are awash in money. The national GOP will do as much of the same as they can for local defense contractors, and other pet MSGOP projects.
In the end, Texas, California, NY, etc pay for us to live in the modern world. Mississippi would still be dirt roads and corrugated tin shacks without federal money. Either way, in the end the power and wealth is still held by a handful of old money families. The rest of us are just sharecroppers on their land. Thankfully Uncle Sam helps us sharecroppers have a few modern comforts.

Anonymous said...

What Sid fails to understand is that this is Step 1 for cutting off the freeloaders. I am so sick of watching EBT shoppers eat better than me. And too many of them aren’t even citizens. Well I guess the anchor babies are technically citizens but they aren’t eating that steak. Their illegal parents are eating it.

The Kim Wade Troglodyte of the Day Award goes to the genius that made that comment. SMH

Anonymous said...

Post the story about David L securing 750,000 in gubment funds for Pres Hills then slings the buzzword for fraud and kickbacks "minority participation" once he gets the funds. Are there any local Civil Eng. Firms that are minority owned ? Will they have to slip David L a blessing to get the contract ? News at never.

Anonymous said...

Reading the tea leaves, sounds like Sid is on the ITEP side of the fence, which makes since , he’s a full time feeder at the government hog trough (MSU) .

Anonymous said...

Since income from pensions, IRAs, 401Ks, Social Security, and other retirement income is not currently subject to state income tax, the house plan amounts to a tax increase on retired people. The phased-in sales tax cut (if it happens) on groceries will not offset the increase in sales tax on everything else.

The proponents of the house plan brag how revenue will increase under the plan, which means everyone will pay more taxes. Meanwhile, out of state corporations pay no income tax and move their profits out of the state.

Krusatyr said...

MS warehouses democrats that other states don't want, so collectively they send federal payments to MS. Want to fix this state? Fix education with vouchers and parental choice.

An educated electorate will ditch a naked boy emperor as mayor and forego this mayor's shifty grifters, plus make other, better decisions, especially re: infrastructure, which in turn will bring business investments and jobs.

Anonymous said...

"An educated electorate will ditch a naked boy emperor as mayor and forego this mayor's shifty grifters, plus make other, better decisions, especially re: infrastructure, which in turn will bring business investments and jobs."

- A resident of a state that is trying to privatize State Parks.

Lol some of y'all do not recognize just how foolish you sound.

Anonymous said...

God forbid the surplus be used for roads in MS towns ( highways where none are needed) or remodel and repurpose abandoned buildings to get the homeless( many of whom can be a potential danger to themselves or others) off the streets.

Or they could help local water systems upgrade to improve water quality and deal with weather changing.

Maybe we could have a treatment facility for juvenile offenders with behavioral issues rather than helping them learn how to be better criminals. Or provide a supervised home setting where they aren't return to drugged out or abusive homes.

Or money could be used for patients released from Whitfield who don't have adequate supervision to stay on meds but can function when on meds.

God forbid those we elect might actually try to discover real world realities for our citizens and how we might make life for all citizens less dangerous to our health and well being.

Anonymous said...

10:02

Thank you for posting this. It is absolutely true and in the long run will hurt the state. Mississippi comparing itself to the other states that don't have income tax is asinine.

Krusatyr said...

11:03am

State Parks are horribly neglected in MS. Private management, not private ownership, is considered because MS has not only done an awful job of maintenance, but has failed to make State Parks attractive resources for residents and visitors.

MS lost 6,000 residents last year, a brain drain, partly because MS is boring and lacks exciting recreational areas, a resource used effectively in most other states.

Yes I blame uneducated democrats for most of MS's failings, so let's erase the dumbass quotient, get rid of the f'd up schools, give parents choices and vouchers.

Anonymous said...

@12:29 PM
I agree with you about the State Parks. I love them. However, at Tishomingo SP for instance, the lake hasn’t held water properly since it was created in the 1930s by the CCC. A lot of the State Parks were CCC projects which were poorly engineered make-work jobs for young men during the Great Depression. I don’t think anyone really has the money to properly upgrade them except the US Dept. of the Interior. We can’t mobilize (almost) free labor like we could in 1932 either. Maybe in 2032 we can.

Anonymous said...

I've seen comments about SNAP beneficiaries and generalizations about democrats, freeloaders, etc.

According to the Center on Budget and Policy Priorities (a non-partisan research and policy institute), in 2019, 36% of SNAP recipients were in households with elderly or disabled family members and 40% of recipients were in working families. The average monthly benefit for all recipient households was $233.

According to the Kaiser Family Foundation (a nonprofit organization focused on national health issues), in 2019, in Mississippi 67% of Medicaid beneficiaries were white, 31% were black, and the remaining 2% other races.



Anonymous said...

@ 2:22pm

Thank you for making that point.

People talking about "illegals" getting it is so freaking stupid, illegal aliens cannot get those benefits because they are not American citizens!?

Any charity they receive comes from churches and private humanitarian organizations. But most of them work and get paid under the table anyway.

Anonymous said...

Funny how tinhorn "journalists", and musicians, are experts on absolutely everything. Dogma, meh.

Anonymous said...

The most dangerous part of this is not acknowledging how poor we really are. We are no where near being independent, if it weren't for federal dollars pouring in we could survive a week. I was always taught just cause you got a little money don't let it burn a hole in your pocket. These tax cuts are REALLY shortsighted and it won't be long til we regret the hell of them if we do this.

Anonymous said...

@8:18 - lay off the crack pipe. You are hallucinating illegals again.

Anonymous said...

Salter forgets his heritage. We don't care if we get our surplus from federal relief, we got Mississippi pride. Good ole barefoot, snaggle-tooth, illiterate Mississippi pride and we will not be outdone thanks to our legislature! You hear that Texas!

Krusatyr said...

Some outdoor activities that could be better exploited and marketed in MS state parks include fly fishing for bream and bicycling on long trails, not necessarily all mountain biking.

When I have fly fished here, washing machines and refrigerator carcasses, as well as old tires and floating garbage flaw the experience.

Kingfish said...

Since there is a surplus, I'd like to see some money spent on raises for the MDOC guards as well as some decent drug treatment programs in prison. Too many inmates are getting hooked on drugs in MDOC prisons.

Anonymous said...

If The Speakah is successful at cutting the price of tags in half, claiming the state will reimburse the loss to each of the 82 counties...where in the world are those millions going to come from?

With a new flag, zero state income tax, medicinal weed, increased medicaid participation and continued Republican leadership, are we prepared for the massive and dramatic in-flow of business, industry and sporting events? Will I-55 and I-20 be eight-laned, one way, coming in? Will 49 be finished in our lifetime? Will Florida and Texas soon be looking at Mississippi's tail lights?

Read the concluding sentence at 8:50 (third post from top).

Anonymous said...

2:22 - the data you cite are national, not Mississippi. Our interest, this thread and these posts relate to the state of Mississippi.


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If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

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