/Reeves, Hood both talk tax breaks as state’s largest-ever tax cuts just kicking in

Reeves, Hood both talk tax breaks as state’s largest-ever tax cuts just kicking in

The fact that the Republican-controlled House voted down the tax cut was surprising because election year tax cuts are normally popular with legislators and because in this super partisan environment the members seldom bulk their leadership. The tax cut was a campaign issue in 2015’s elections. In reality, the issue of the tax cut was irrelevant in 2015 because the state Democratic Party had one of the weakest candidates in modern history, and didn’t have the resources to wage competitive campaigns. The Democrats’ nominee for governor, Robert Gray, was a nice guy but didn’t care enough to vote in the primary election. Gray was working long hours in his tractor-trailer 18-wheel tractor. In 2016, the Republicans won the election and passed a $415 million tax reduction, which is about 7 percent of the total general fund. The same corporate tax cut was included in this proposal as the 2015 plan. This would have cost the state approximately $245 million per year. The tax cut for personal income, however, was decreased from $300 million to $150 million in 2015 to $150 million in 2016. Mississippi Manufacturing Association and other corporate groups invested considerable resources to ensure that legislators supporting its passage were elected. There were very few candidates and resources available to oppose the passage of this tax cut. There is a race for the governor this year between Republican Lt. Governor Tate Reeves and Democratic Attorney General Jim Hood. Tate Reeves. Hood proposed that the state’s 7 percent food sales tax be reduced. Hood is not the only one to question why the state with the largest number of poor people in the country would have the highest grocery tax. Most states have either exempted the sales tax on food, or a lower tax on food than the levy they impose on other retail products. Reeves suggested another reduction to the personal income tax during at least one debate. According to the Department of Revenue, this cut would result in the state spending approximately $180 million per year. According to the Department of Revenue, the 7 percent food tax generates $267 million to $315 million each year for the state. Hood proposed reducing the 7 percent grocery tax by half. Hood also promised to make sure that municipalities that receive only a portion of the grocery taxes are compensated by the state. Hood and Reeves are making tax cuts this election season, even though the 2016 tax cut has just begun to have an effect. The Department of Revenue has calculated that the tax cut of 2016 took only $33.6 million from the state’s revenue stream for the 2019 fiscal year, which ended June 30. Its cost for the current fiscal year is $92 million, $150 millions for the next fiscal year, and $205 million the next. It will continue to rise until it is fully implemented in fiscal year 2028. It is not clear whether it is prudent fiscal policy to pass another major tax reduction when the state is only beginning to absorb the biggest tax cut in its history. Reeves believes that further reducing income tax should be part of larger tax reforms to make the state system more “flatter” and “fairer”. Hood believes that the grocery tax cut can be funded by reducing waste and ensuring that large corporations outside of the state pay their fair share. As a result, the 2016 legislation has eliminated the franchise tax. This is a tax that is paid on the company’s earnings and not its capital. Even those who opposed the tax cut in 2016 concede that the franchise tax was unfair. The problem is that the Mississippi franchise tax is the only state income tax that many corporations, especially state-owned companies, pay. According to a 2013 Department of Revenue study, 111 of 150 state’s largest employers paid no income tax. The names of the companies weren’t provided, but the majority of those not paying income tax are likely to be large state retailers. In 2016, some argued for a broad tax cut that eliminated the franchise tax but levied other taxes on corporations to make sure large companies didn’t evade paying taxes. This proposal was rejected by the legislative leadership. Remember that about 50 tax cuts were passed in the four years prior to the 2016 tax cut. More than $700,000,000 in tax cuts have been passed in recent times. The majority of those cuts were approved by corporations.