Two competing tax plans are being considered by the Mississippi legislature. The House plan, published in January and voted through already as HB1, offers to eliminate the state income tax. The Senate this week published their rival proposal.
Which of the plans is more conservative?
Speaker White’s House tax plan is without question the more conservative proposal. It offers full elimination of the state income tax over the next decade, a net $1.1 billion reduction in the amount of money the state government takes from taxpayers, and a cut in the grocery tax.
White’s plan is the product of careful deliberation and public consultation. White organized a public Tax Day, open to everyone. Rep Trey Lamar, who authored a lot of the detail, fielded all sorts of suggestions. The plan they produced reflects that collaboration and candor.
Delbert Hosemann’s Senate plan only offers a $330 million cut in the tax take. The Senate plan would leave politicians in control of a far larger share of your money – which a cynic might say is its purpose. The Senate plan was produced behind closed doors, only being unveiled halfway through the session.
The Senate plan should be seen as a deliberate attempt by anti-tax cutting politicians to try to head off Governor Tate Reeves / Jason White’s conservative tax cutting agenda. Hosemann’s tax plan would still leave the income tax in place, albeit at a reduced rate of 2.9 percent. The Senate plan would be to cut the grocery tax to 5 percent, rather than the 4 percent the House wants.
I'm not wild about the idea of any increase in the sales tax. What I don’t like about either plan is that they won’t just raise the gas tax, but they frontload that gas tax increase before the tax reductions kick in elsewhere. The House suggests raising the gas tax by 15 cents a gallon, while the Senate suggests 9 cents. If revenue needs to be raised to improve our roads, a more conservative approach might be to have time-limited taxes, with revenues earmarked for specific infrastructure projects.
That said, it would be disingenuous for any supporters of the Senate plan to attack the House plan from the right, given that the Senate is also proposing to increase the gas tax while continuing to tax your paycheck every month.
I worry that the Senate plan is primarily an exercise in political positioning, rather than income tax elimination. “Read my lips” I imagine those that drafted it want to be able to say “We support tax cuts! Here’s a token cut in the grocery tax, and a slightly lower increase in the gas tax. We’re not RINOs! Really”.
That kind of distraction strategy might once have worked if no one paid attention and the local media only ever criticize you from the progressive left. I’m not sure it will work anymore. If you posture as a tax cutter but put all your energy into a tax plan designed to dilute actual tax cuts, you will be called out.
Delbert Hosemann is reported as saying he believes full elimination of the income tax would be over ambitious. Since when was it “over ambitious” for Republicans with a super majority to get on and do conservative things?
I don’t see President Trump and Elon Musk holding back from doing what needs to be done because it is “over ambitious”. Our legislature needs to recognize that Mississippi has a historic political and economic opportunity to eliminate the state income tax. Mississippi is starting to see real growth, thanks in large part to the tax cuts we have already implemented. It is not a coincidence that when Arkansas cut their income tax rate, they set it at 3.9 percent in order to be just below our current rate of 4 percent.
Implementing the Senate plan, which would retain the income tax rate at 2.9 percent, rather than abolishing it, would make Mississippi less competitive than our neighbors. If passed, the Senate plan would squander the chance to deliver bold reform, while institutionalizing our economic uncompetitiveness.
Conservatives should support the House plan, with some possible modifications.