/Expanding sales tax under consideration

Expanding sales tax under consideration

The Mississippi tax policy is being reviewed by the legislative group, which includes 13 Republican legislators, five Democratic lawmakers, and a governor’s appointee. Lt. Gov. Tate Reeves (R-Florence) and Philip Gunn (R-Clinton), co-chair the committee earlier this year, stated that “everything” is on the table when it comes reforming the tax code. This includes reversing the $415million tax cut this year, as well as raising taxes. After her presentation, Nicole Kaeding, Tax Foundation economist, said Monday that she understood that implementing the proposed reform was not an easy task. I have a benefit, no political considerations. I don’t even live in Mississippi. … However, I believe that what you can learn about other states is that the best place to begin is not to think about these recommendations but rather the mission for Mississippi. Kaeding said, “Where do you want to see yourself in 10 years? Five years? Next year?” It’s easy to choose the focus areas once you have established your vision. This is the most difficult part. Monday’s recommendations were based almost entirely on Tax Foundation 2016 state rankings. These were released last week. According to the rankings, Mississippi’s overall income tax code was ranked 28th. A 2016 law that will eliminate the 3 percent individual and corporate income taxes and the franchise tax will improve the ranking, Keding stated. Monday’s focus was on the property tax structure and sales tax structure in Mississippi, which were ranked 38th and 35th respectively. Mississippi imposes sales taxes on business-to business transactions, such as farm equipment and manufacturing machinery. Kaeding proposed eliminating these transactions in order to promote business growth. He also suggested imposing sales taxes on items not currently subject to the sales tax structure, such as gasoline sales, legal, financial, and medical services, and fitness and barber service. Kaeding stated that “your sales tax base is very small.” This means that your rate is now higher than it would otherwise be. Taxes on goods that are more than one can tax will be lower. “The lower the rates on the fewest goods, the faster the elimination of Mississippi’s franchise taxes (currently scheduled for 2028), and the elimination of its intangibles tax which taxes stocks, bonds and trademarks, Kaeding suggested. Kaeding stated that the Mississippi intangibles taxes, which are virtually unregulated, discourage banks from opening new branches and expanding capital. Two-hour meeting at Capitol Monday morning was met with probing questions by lawmakers. Juan Barnett (D-Heidelberg) started a long conversation about Internet sales taxes. Mississippi doesn’t have any laws or regulations that would tax online sellers of goods like Amazon. Barnett stated that “Internet sales take away the Mississippi mom and pop shops.” “Why don’t we talk about this today?” Congress is currently considering a variety of bills to more uniformly regulate online transactions. Kaeding stated that the Tax Foundation believes Congress should regulate Internet sales as they are “interstate sales.” She also cited legal issues if the state introduced its own legislation. Representative Mark Baker, R.Brandon, suggested Mississippi adopt the Alabama model and pass a law taxing internet sales. Baker stated, “I believe that we should follow Alabama as closely possible and get ourselves into line for litigation.” Sen. Willie Simmons (D-Cleveland) and Rep. Sonya Wilkes-Barnes (D-Gulfport), suggested that the panel hear from another nongovernmental agency with a different view on Mississippi’s current tax code. The Tax Foundation is not partisan but supports conservative fiscal policies. Reeves said that representatives from the Tax Foundation would be available for the remaining hearings of the working group. Gunn also stated during the meeting. “The joint panel would like to hear from others in addition to the public comments we are receiving from mstaxpolicy@ls.ms.gov,” Hipp said. “However, they wouldn’t expect them a public forum for a liberal Washington, D.C. thought tank that wants to increase income taxes across all levels because that’s what Mississippi families don’t want or need.” Reeves, Gunn, and Hipp encouraged legislators to start thinking about what Mississippi could accomplish in the future. Reeves stated that he believes we can both reduce taxes and increase revenue. Reeves stated that if capital is taxed less, it will attract more capital into the state. This will increase revenue. Many people will opine… but in reality, we can grow our economies if we create more taxpayers.” To support this work, you can make a regular donation to the Spring Member Drive today. This will allow us to continue important work such as this story. Our reporters give a human face to policy’s impact on everyday Mississippians by listening more closely and understanding their communities. To ensure that our work is aligned with the priorities and needs of all Mississippians, we are listening to you. Click the button below to let us know what you think.