Both the Senate and the House of Representatives have passed a bill on Critical Race theory by large majorities. The bill was drafted as model legislation by the Mississippi Center for Public Policy. 

“I am delighted that both the House and the Senate have now voted in favor of this bill by large majorities” said Douglas Carswell, President & CEO.  

“When we published our report on Critical Race theory in Mississippi in October, we presented clear evidence that this extremist ideology is being promoted in our state.”

“Our report included a model bill to tackle this problem – and this bill has now been sent to the Governor for signature.” 

“Our CRT bill does not prevent the teaching of history.  Nor does it mean that teachers will no longer be able to educate young Mississippians about the Civil Rights movement.”  

“What our bill does do is help safeguard Dr Martin Luther King’s vision of America as a country in which individuals are judged on the content of their character, not the color of their skin”.

“Having led the way in tackling Critical Race theory, I hope that other states across America will now follow Mississippi’s lead”  

The Mississippi Center for Public Policy hosted a large event in Jackson with Lord Daniel Hannan.

A former Member of European Parliament, and key figure in Britain's Brexit campaign, Lord Hannan talked about American freedom and Mississippi's role in both preserving and promoting US exceptionalism.

A video of the talk will be available soon.

A key free-market principle is that economic freedom and consumer choice should be the basis for economic policies. Mississippi’s House Bill 833 is a bill that goes against these principles by creating a regulation that vehicle manufacturers must use a third-party franchise dealership to sell their cars. The bill recently passed the House and has been referred to the Senate finance committee.  

In the wake of innovative technologies, innovative business models have emerged with them. The car industry is no exception. As electric cars are being developed, manufacturers have sought alternative ways to lower costs for consumers. One way that manufacturers accomplish this is by selling their vehicles directly to consumers instead of using the traditional dealership franchise model.

Why has the government gotten involved in auto dealerships in the first place? To better understand the root of this debate, it is helpful to consider the historical background. Instead of selling their cars directly to consumers, manufacturers have historically sold their cars through third-party franchises.

 By the middle of the 20^th century, the car market had consolidated to only a few manufacturers. Since there were only a few manufacturers, dealers were concerned that manufacturers would leverage their market dominance as a way to force dealers into one-sided franchise contracts. To push back against this, the dealers successfully lobbied for franchise laws that set minimum standards for the contracts between manufacturers and dealers.

Under current law, a car manufacturing subsidiary is not prohibited from obtaining a license to operate a dealership. Some have argued that this violates the franchise laws that govern agreements between manufacturers and franchisees.

However, the original purpose of the franchise laws was to regulate contracts between manufacturers and actual third-party dealers, not to require that all car manufacturers use the franchise model. Suppose a company does not use the franchise model. In that case, it should not be pushed out of the market by laws that are intended for franchise contract regulation.

Should the government decide that because cars have historically been purchased through franchises, that this must be the case indefinitely? Ultimately, the issue boils down to consumer choice. If a consumer decides that they do not want to have a dealership involved in their vehicle purchase, government policy should not force them to.

Some consumers may prefer the dealer franchise experience over purchasing a vehicle straight from the manufacturer. Yet, it is anti-free market policy for the government to force all citizens everywhere in the state to only purchase a vehicle exclusively from franchisees.

Comparable to the issue of mandating car dealership franchises is a consideration of other goods in the market. For instance, imagine if Mississippi required all restaurant chains to operate as a franchise. Chick-Fil-A, Subway, and other franchise restaurants chains would still be options on the table for consumers. Meanwhile, Mississippians could not enjoy a meal from Cracker Barrel, Chipotle, Panda Express, or other non-franchise restaurants.

Thankfully government overreach has not gone that far yet, but House Bill 833 would impose such a rule on car choices. Mississippians could take the car by the drive-through at as many non-franchise restaurants as they pleased. But buy that new electric car from a non-franchise dealer? No indeed not.

Personal preferences and choices are the lifeblood of a free economy, not a system where individuals are forced to comply with heavy-handed government regulations. House Bill 833 is bad for consumers, the free market, and the state of Mississippi. Free people should have the ability to make free choices without a nanny state forcing them to buy certain items in their state through a third party.

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