I hope all is well!

The Legislature continues to move at full speed. It is critical that Mississippi citizens stay informed so that they can remain knowledgeable about how their legislators are representing them and whether those legislators are working to safeguard our fundamental rights and liberties.

Here’s your update on The Good, The Bad, and The Interesting. I hope you find it helpful!

The Good:
- Gov. Reeves announced a new program to support Mississippi military families. The initiative will highlight ways that schools can be more flexible and supportive of students who move districts due to military requirements.

- HB 917 by Rep. Jansen Owen would remove burdensome obstacles from those seeking to participate in home-based work. With thousands of businesses being started from Mississippians’ homes during the pandemic, it makes tremendous sense that we would reward these folks with continued opportunity rather than punishing their innovative efforts.

- HB 512 by Rep. Trey Lamar would remove the Department of Revenue from being the distributor of alcohol for the state and would allow for the creation of a free-market-oriented system. It is about time the state eliminated the final remnants of prohibition. Controlling the sale of alcohol is not an essential task of the government.

The Bad:
- SB 2164 would create a Department of Tourism. I am all for encouraging people to come and enjoy the beauties of Mississippi, but we don’t need to continue the government’s vast expansion to accomplish this. Too often, these new departments replicate existing efforts but through a consolidated format that ultimately ends up costing the taxpayers more money.

- A range of Mississippi news outlets are pushing for the state to expand Medicaid. The facts are clear – Medicaid expansion has consistently failed to deliver the desired results. The care that is given often fails to be better than that received without coverage and, in some cases, is actually worse.
Furthermore, up to 50% of payments that the system makes in other states are improper and fraudulent. Altogether, there is no reason to put further trust in a ship that is already sinking. Pushing folks into a broken welfare trap that is spiraling out of control while failing to offer basic care is not compassionate, it’s reckless.

The Interesting:
- Many of y’all were interested in HB 1487, which makes One Mississippi by Steve Azar the official song of Mississippi. This bill passed the House and will soon be considered by the Senate. What do you think some potential alternatives to this could be?

Let me know what you think about these policy issues and others moving being considered by the legislature. As always, if you have any questions or thoughts, feel free to reach out!

All the Best,

Hunter Estes
Senior Director, Policy & Communications

To confront Bidenomics inflation and devalued currency, many citizens have invested in precious metals to protect their investments and savings. Despite this, Mississippi imposes a sales tax on precious metals.

Thankfully, Representative Jill Ford has introduced House Bill 426 to remove this tax, and it passed the House of Representatives today. The bill now moves to the Senate for consideration.

To grasp the importance of House Bill 426, it is vital to grasp the current state of affairs regarding precious metal taxation. The citizens of other states can purchase gold as a protection from “the hidden tax of inflation” without getting a sales tax on top of it.

According to analysis produced by the Sound Money Defense League, Mississippi is one of only nine states in the nation that imposes sales tax on bullion. In addition, of the states that impose sales tax on bullion, Mississippi has among the highest state-level sales tax of the nine states that impose sales tax on bullion.

This means that even when compared to the few states that also impose sales tax on precious metals, Mississippi has the least competitive rates. Furthermore, of the four states that neighbor Mississippi, three of them do not charge sales tax on the purchase of bullion. This means that those seeking to purchase precious metals are far better off with Mississippi’s neighbors.

It is easy and accurate for Mississippi leaders to justly point fingers at Washington for the inflation that has eaten away at American savings and investments. Yet, the state of Mississippi is to blame if its citizens are hesitant to exchange the inflating dollar for gold when the gold is 7 percent more expensive just because of a state-level tax.

When Mississippi imposes a sales tax on gold, this can heavily impact the growth potential of gold as a protection against inflation. Consider the following scenario. A Mississippian might have bought $5,000 in gold in 2018 at the average price per ounce of $1,268. This would have given them a tax bill of $350. This would mean that the total investment cost would be $5,350.

If the sales tax was not there, the entire $5,350 could be used to purchase gold. This would mean that in 2021 the $5,350 investment cost would have been worth an average of $7,089 with the sales tax. Without the sales tax, this $5,350 investment cost would be worth $7,569. That $350 sales tax would ultimately cost the taxpayer $480 in gold value.  It’s time for Mississippi to repeal this burdensome tax that discourages investment and places a sales tax penalty on those who seek to protect their money from inflation. Hats off to the legislature for working to remove this tax that works against Mississippians seeking to protect their savings and investments with precious metals.

Income tax elimination is top of the political agenda in Mississippi, and it is potentially the most exciting economic reform in our state in a generation.

Under the Mississippi Tax Freedom Act, approved by the House of Representatives by a massive majority, no one earning less than $40,000 a year would pay any state income tax at all.  

The House plan is prudent, too.  In order to ensure that we can afford to scrap state income tax, the plan commits to further eliminate the income tax as other sources of tax revenue grow.  There is nothing rash or risky about this approach.

What the House plan would do is make our state competitive.  At the moment we are surrounded by states that do not have any state income tax – states like Tennessee, Texas and Florida.  

In order to be able to grow our state, we need this plan to pass.

That is why it is so disappointing to see the Senate offer an alternative plan which would not eliminate the income tax at all.  

The Senate plan proposes eliminating the 4 percent income tax rate.  Sounds great, no?  

In reality, so few pay much tax at that rate anyhow, it would mean that the average Mississippi worker was only about $200 a year better off.  That would not be enough to by a Subway sandwich each week. 
 
The Senate plan cannot credibly be called a tax elimination plan.  I am not certain that it does much to reduce the amount of tax people pay at all. 

The Senate plan implies a significant reduction in the amount of tax we pay when we get a new car tag.  But this is disingenuous.  Since most of the car tag tax is local, the state reduction that the Senate implies would mean a reduction in your car tag tax of no more than $5.

The House plan is the only plan under consideration that would give back to Mississippi taxpayers much of the billion dollar surplus in the state budget. The Senate plan, however, leaves politicians free to spend that money instead.  Perhaps that is the intention? 
  
Taking into account all of the changes proposed, including changes to the sales tax rate, the House plan would leave almost every Mississippian, under pretty much every scenario, better off.  It is difficult to see how anyone would be made significantly better off under the Senate plan.  

I fear that the tax plan that the Senate has proposed risks undermining the credibility of those calling for tax breaks altogether.  
 
We are all familiar with politicians who run campaigns against “the swamp” but then disappear to DC to enjoy lunch with lobbyists.  How do you imagine voters would react when they discover that the car tag tax reduction they are being sold as part of the Senate plan will only reduce their car tag by $5?  

We are at a critical moment in the future of our state, and I hope that our lawmakers will do the right thing and seize this chance to make our state properly competitive.  Unless our lawmakers find a way of coming together behind a plan that actually lifts the tax burden, our state will continue to lag behind.  

Bottom line

Over the last ten years, Mississippi has made great progress in enhancing welfare program integrity. A critical part of that effort was requiring the state to switch from ‘simplified reporting’ to ‘change reporting’ in food stamps. Undoing that reform will move Mississippi backwards and cost the truly needy.

How it works: simplified reporting vs. change reporting

Under federal law, states have discretion in determining how households receiving food stamps must report changes in income.[i] More specifically, states can decide which households are subject to simplified reporting and which are subject to change reporting.

When states assign households to simplified reporting, they are only required to report changes which make the household ineligible. In other words, households are only required to report changes in income that put the household’s income at higher than 130 percent of the federal poverty level.[ii]

Even if every household on food stamps had a perfectly clear understanding of what exactly is 130 percent of the federal poverty level in any given year, this approach is essentially an honor system. It relies on individuals voluntarily disenrolling themselves from public assistance. The disincentives and ripeness for waste and fraud under this system should be obvious.

On the other hand, when states assign households to change reporting, households are required to report all changes in income greater than $100 within ten days so that the department can reassess eligibility.[iii] The eligible will continue to receive benefits and the ineligible will be removed.

States may subject some types of households to simplified reporting and others to change reporting or use one reporting system across all households. Mississippi is among over twenty states that assign at least some households to change reporting.[iv]

Behind the scenes

In terms of practical effect, change reporting is much more effective in identifying waste and fraud. That means it has major benefits for the taxpayers who fund the program and for those who want to see people move from welfare to work. But that increased identification can lead to superficial increases in reported payment errors. With proper anti-fraud measures, these increases should be temporary.

Simplified reporting, on the other hand, has two major benefits for bureaucracies. First, waste that is never discovered cannot be reported or punished. If simplified reporting does result in fewer “errors,” it does so only because it waives the requirement that the state try to eliminate errors by requiring accurate reporting---not because it operates more efficiently. Second, because simplified reporting identifies fewer ineligible enrollees to be removed, the reporting system increases enrollment while decreasing effort on the agency’s part.

These are bureaucratic benefits—not the priorities of the taxpayers or the truly needy who are actually eligible for benefits and rely on the integrity of these programs. 

Mississippi’s forward progress

In 2017, Mississippi took a big step forward in protecting the integrity of its welfare programs. The legislature passed the Medicaid and Human Services Transparency and Fraud Prevention Act.[v] One of that bill’s most significant accomplishments was the requirement that the state’s Department of Human Services implement change reporting across food stamps.[vi]

Mississippi is certainly not alone. In switching to change reporting, Mississippi is among over twenty other states which use change reporting in their eligibility systems, including Arkansas and Tennessee.[vii]  

The Department of Human Services has voiced concern. To its credit, the department has not hidden its motivations. In the two years since implementation of change reporting, improper payment rates have increased. The department worries that these higher rates will lead to administrative penalties from the Biden administration. But an increase in the discovery of improper payments is not a flaw of change reporting. It is one of its principal aims.

Understandably, the department does not want to be punished for the failure of its enrollees to report changes. But, put simply, the department has identified more enrollees breaking the rules and receiving benefits for which they are not eligible. Its response—asking to change the rules—is not the solution.

Switching back to simplified reporting to reduce the improper payment rate will do nothing to actually reduce improper payments.

This is a bureaucratic shell game where hiding waste and fraud takes a higher priority than catching it. It is akin to closing down a 9-1-1 call center and reporting a decrease in reported crimes.

Nor is it clear that the department has considered how much of the recent uptick is tied to recent fluidity in the labor market. Changes in income were far more common in 2020 due to the COVID-19 pandemic than in typical years.

Conclusion

The solution is not to end the requirement so fewer improper payments are discovered. The solution is to increase enrollee reporting.

As Mississippi recovers from the pandemic and explores tools to increase enrollee reporting, the state’s improper payment rate should decline. Simplified reporting will, instead, hide the problem from effective oversight and increase spending and dependency in Mississippi’s welfare programs.

[i] 7 CFR 273.12

[ii] Ibid.

[iii] Ibid.

[iv]  Food and Nutrition Service,“Supplemental Nutrition Assistance Program: State options report, 12th ed,” U.S. Department of Agriculture (2016), https://fns-prod.azureedge.net/sites/default/files/snap/14-State-Options.pdf

[v] 2017 Miss. H.B. 1090

[vi] Miss. Code Ann. § 43-12-33

[vii] Food and Nutrition Service,“Supplemental Nutrition Assistance Program: State options report, 12th ed,” U.S. Department of Agriculture (2016), https://fns-prod.azureedge.net/sites/default/files/snap/14-State-Options.pdf

A tremendous amount has happened under the dome of our Capitol building in the past week. The House and Senate had deadlines to move bills from their own respective chambers. So now they will begin considering legislation from each other.

All the Best,

Hunter Estes
Senior Director, Policy & Communications

The Freedom of Speech is what made America. It is what has made America. Without it, there would be no discourse in our democratic republic, and there would most likely be nothing but a spastic majority rule.

Whether it be a media personality, a private citizen, a college professor, or a public official, no one seems to be safe from cancel culture nowadays. Cancel culture, many say, is simply more free speech holding others accountable, and while I see where they might be coming from, it's to the extent that many go with it that truly bothers me – silencing those you disagree with to the point of ruining lives and exiling them.

If one is offended by something's unjustness or immorality, then they may boycott it or do whatever they want with their freedom of speech to call out whatever it is they're calling out. But, if people feel afraid to express their views because of cancel culture, if they stop their ideas before they’ve even taken form, that’s a chilling effect. People from both sides of the aisle are guilty of it, but over the past decade or so, the Left has increasingly taken advantage of this form of bullying.

One of the most recent examples here in Mississippi was at the collegiate-level when the Young Americans for Freedom (YAF) chapter at Ole Miss took part in Young America’s Foundation’s Freedom Week, an event held on the anniversary of the fall of the Berlin Wall. The students constructed a mock wall and spray-painted it with “microaggressions,” “safe spaces,” and other terms leftists use in their attempts to squelch free speech. There, they were questioned by university administrators who expressed disapproval.

A month later, the chapter received a letter from the university’s Office of Conflict Resolution and Student Conduct notifying them of a report alleging that the organization had held an “unregistered event." Ole Miss YAF’s Berlin Wall event did not meet any of the criteria to require registration, but out of an abundance of caution, the group did submit a registration form four business days before the event, but they never received a response and went ahead with the event.

The organization was informed that they would be subjected to a judicial review process to determine whether they had violated any university policies and whether any punishments should be imposed, or, they could agree to an administrative punishment which would prevent them from registering any events for thirty days.

The Mississippi Justice Institute then stepped in with a letter to Ole Miss stating that the chapter, "considers the free speech rights of its members to be of the utmost importance to the members themselves, to the mission of Ole Miss YAF, and to society at large, and is therefore prepared to take further action to protect the rights of its members."

After back-and-forth discussions, Ole Miss terminated the unfounded administrative proceedings against the chapter.

What this all really boiled down to was there was one party who did not like what the other was saying and they tried to shut them down for no justifiable rhyme or reason. What happened at Ole Miss though, was not a government mandate, but a cultural one. The First Amendment itself isn't under attack with any laws or mandates, but its spirit is. This is not a problem that can be solved in court room but at town hall meetings and public squares. This is a cultural issue that only We, the People, can address. When your surrounding culture is so toxic and so hostile to differing opinions that they would rather completely cancel you than debate you, your democracy is at stake.

Income tax elimination is top of the political agenda in Mississippi, and it is potentially the most exciting economic reform in our state in a generation.

Under the Mississippi Tax Freedom Act, approved by the House of Representatives by a massive majority, no one earning less than $40,000 a year would pay any state income tax at all. 

The House plan is prudent, too. In order to ensure that we can afford to scrap state income tax, the plan commits to further eliminate the income tax as other sources of tax revenue grow. There is nothing rash or risky about this approach. What the House plan would do is make our state competitive. At the moment we are surrounded by states that do not have any state income tax – states like Tennessee, Texas and Florida. 

In order to be able to grow our state, we need this plan to pass. That is why it is so disappointing to see the Senate offer an alternative plan which would not eliminate the income tax at all. 

The Senate plan proposes eliminating the 4% income tax rate. Sounds great, no? 

In reality, so few pay much tax at that rate anyhow, it would mean that the average Mississippi worker was only about $200 a year better off. That would not be enough to by a Subway sandwich each week. 

The Senate plan cannot credibly be called a tax elimination plan. I am not certain that it does much to reduce the amount of tax people pay at all. 

The Senate plan implies a significant reduction in the amount of tax we pay when we get a new car tag. But this is disingenuous. Since most of the car tag tax is local, the state reduction that the Senate implies would mean a reduction in your car tag tax of no more than $5.

The House plan is the only plan under consideration that would give back to Mississippi taxpayers much of the billion dollar surplus in the state budget. The Senate plan, however, leaves politicians free to spend that money instead. Perhaps that is the intention?
  
Taking into account all of the changes proposed, including changes to the sales tax rate, the House plan would leave almost every Mississippian, under pretty much every scenario, better off. It is difficult to see how anyone would be made significantly better off under the Senate plan. I fear that the tax plan that the Senate has proposed risks undermining the credibility of those calling for tax breaks altogether. We are all familiar with politicians who run campaigns against “the swamp” but then disappear to DC to enjoy lunch with lobbyists. How do you imagine voters would react when they discover that the car tag tax reduction they are being sold as part of the Senate plan will only reduce their car tag by $5? 

We are at a critical moment in the future of our state, and I hope that our lawmakers will do the right thing and seize this chance to make our state properly competitive. Unless our lawmakers find a way of coming together behind a plan that actually lifts the tax burden, our state will continue to lag behind. 

Senate Bill 2604, titled the "Mississippi Broadband Expansion Act," passed the state Senate in recent days and will now go to the House of Representatives for consideration. While the title of the bill gives the impression of meaningful broadband expansion, the bill actually increases the size of government by allowing select municipalities to establish broadband networks.

In 2019, the legislature passed a bill allowing electric power associations to offer broadband services. In turn, many of the municipal electric systems wanted to start offering broadband services as well. This year's bill allows for such systems to do that. At first glance, it may seem like a beneficial proposition to some. However, government-owned broadband networks have a long history of failure and waste taxpayer money.

The complexities of broadband service

In the first place, it is important to recognize that the complexities of broadband are highly specialized and more challenging than other services like electricity that municipalities already offer in many places.

For instance, it is far more difficult to predict the revenues of broadband networks than electricity and water utilities. The reason for this is relatively simple. While electricity and water service is an absolute necessity that practically no consumer will willingly go without, broadband has not yet gone to the level of a basic living standard.

In light of this, many people within the municipal broadband service area may not choose to get the service for any number of reasons. In some cases, a citizen just may not see a need to have broadband in their home. In other cases, consumers may choose to use alternative broadband sources such as cellular or satellite.  

Search uncertainty leaves municipal broadband networks with the necessity to estimate their potential customer base. This requires hiring consultants to analyze the city demographics, infrastructure, and interest in broadband. While such assessments may be helpful in some cases, they are notoriously inaccurate, often leaving cities with thousands of dollars in consultancy costs, with taxpayers having to pay for false data.

In addition, if the expected broadband service revenues are lower than expected, many municipalities have been forced to prop up their networks with additional taxpayer funds. This ultimately places the burden of the increased costs on taxpayers, even for those who never even bought the service in the first place.

The potential for private sector deterrence

In addition to the complex inefficiencies and waste that many municipal broadband networks have brought on taxpayer budgets, municipal broadband networks also have the potential to push away private sector investment.

As broadband expansion costs become cheaper with new technologies, many cities and towns already have private sector investment and broadband expansion on the horizon. However, when the government places its hand into the free market, an imbalance is caused.

For example, consider a municipality with a broadband service territory of 8,000 residents. Sixty percent of those customers might be fairly satisfied with their service (4,800 people), and 40 percent might be dissatisfied (3,200 people). In a free market context, the broadband provider would be motivated to satisfy those customers so that revenues can keep flowing to sustain the operation.

However, in this case, a government municipality would have taxpayer dollars to fall back on no matter how bad the service actually is. What's more, private sector investment would have less motivation to invest in that market because 60 percent of the customers did not want a new broadband provider. In the meantime, the 40 percent would be stuck with poor service and a lack of consumer choice.

Broadband growth should not be a doorway to government growth

There is little debate that Mississippi needs broadband growth and expansion. But using the failed model of municipal broadband networks is not the way to get Mississippians the service they need. Municipal broadband may provide a temporary solution in some cases. Yet, the long-term effects of such networks on taxpayers and private sector investment often outweigh potential benefits.

Other states have been down this road, and they serve as a cautionary tale for the Magnolia State. Rather than growing government, municipal broadband should be rejected in favor of policy models and free-market solutions. This is a true pathway for Mississippi to move forward into the future.