Mississippi House Republicans insist on starting the process of eliminating the state income tax right away — no questions asked.
After the Senate last week let the House bill die in committee, the House tried a second path. It attached most of its original income tax legislation to a bill, already approved by the Senate, which authorizes borrowing money for repairs and renovations at state universities.
Assuming this gets passed in the House, the bill will then go to a conference of six lawmakers — three from the House, three from the Senate. They will try to negotiate a solution to the substantial differences between the House bill and the one the Senate passed.
These negotiations almost certainly will fail, as Lt. Gov. Delbert Hosemann has been wary of the House proposal, which raises sales taxes and other taxes in exchange for getting rid of the state income tax over a decade. The House’s maneuverings are little more than a waste of time and energy.
The Senate got this one right. Its Finance Committee chairman said the Legislature should take more time to assess the impact of decreasing some taxes and raising others. He suggested hearings on the topic over the summer, when lawmakers are not in session.
House Republican leaders counter that it’s time for bold action on the state’s tax system. But the way they’ve handled it seems designed to prevent thoughtful consideration.
There’s no other way to explain it. Is the public seriously supposed to believe that a sweeping tax change, introduced in the House on Feb. 22, approved by a committee that day and then approved by the full House the very next day, has been thoroughly analyzed?
In fact, the House has already caved on part of its original plan. When the bill increased taxes on agricultural equipment, it was easy to predict that influential farm lobbyists would object. Same for the manufacturing lobby, whose taxes also would have gone up. Sure enough, the legislation the House added to the Senate-approved bill Wednesday eliminated those increases.
That’s one signal that changing who pays how much tax needs more research. Another signal is that, for once, the state is doing stunningly well with its tax collections.
The Mississippi Department of Revenue’s website reports total tax payments of $5.8 billion from July 2020 through February. That is almost $600 million more compared to the same eight months of the prior fiscal year.
Sales taxes are up 6%, to $2.18 billion. But income tax payments and corporate tax payments have skyrocketed — during a pandemic, no less. Income taxes and paycheck withholdings are up 11%, to $1.6 billion, while two types of corporate taxes are up 44%, to $884 million.
Maybe (probably?) federal stimulus money is responsible for some of these increases. And to be sure, there is no way to guarantee that one good year of tax revenue means this will happen regularly.
But the numbers say the Mississippi economy is growing nicely. If that’s the case, what’s the need for such a wrenching tax change?