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.

FOR IMMEDIATE RELEASE

(Jackson, MS): The Mississippi Center for Public Policy continues to push for the elimination of the State Income Tax.

"The House has produced a plan that hands back to taxpayers much of the billion-dollar surplus in the state budget. Unfortunately, the counter-proposal that the Senate has now come up with leaves politicians free to spend that money instead," said President & CEO Douglas Carswell. "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."

Under the Mississippi House of Representatives tax plan:

• A Mississippian making a gross income of $40,000 a year would get an approximate $1,500 reduction in taxes through eliminating the income tax, according to a summary published by the House. This translates to an approximate net income increase of 3.8%. That would leave Mississippi workers with more money each month to spend on themselves and their families.  It would make our state tax competitive, like Tennessee and Texas, neither of which have a state income tax anymore. 

Underthe Mississippi Senate tax plan:

• A Mississippian making a gross income of $40,000 a year would get an approximate $260 reduction in taxes. This would be a mere 0.65% net income increase.
• In addition, although the Senate plan removes the 4% bracket from the income tax, there is no path in the plan that aims towards the total elimination of the state income tax.

Senior Director of Policy & Communications Hunter Estes said, "Mississippians deserve to keep more of their own money. We’re glad that our legislators are coming together to recognize this. However, one of these proposals is far stronger than the other. Our political leaders ought to stick to the promises made to their constituents and commit to a full repeal of the income tax, as proposed within the House plan."

The Mississippi Center for Public Policy believes the state needs real tax real tax relief, and repealing the income tax would be both a moral and economic good, leading to higher incomes, competitiveness, and prosperity for all Mississippians.

While both the Senate and House plans give commendable tax cut proposals, the House plan carries the most promise as a catalyst for true tax relief and long-term growth. Rather than merely giving Mississippians tax breaks that are well-intentioned but non-transformative, the time has come for state leaders to give the people meaningful tax relief.

For media inquiries, please reach out to Stone Clanton, [email protected].

Tax cuts and reforms can be implemented from several angles. In Mississippi, the most transformative place to start would be by repealing a current tax that taxes people’s livelihoods, commonly known as the income tax. The Mississippi House Representatives and the Senate have presented separate tax cut plans, but not all tax plans are created equal.

Determining the extent of the income tax repeal has been influenced by many factors. However, among the most significant of these factors is determining a balance. The state needs a balance that gives Mississippians impactful tax reform while maintaining a fiscally responsible budget. Without keeping this balance, the tax reform proposal will either focus on the state budget so much that it does not give meaningful tax cuts. Or the tax cuts will go so far that government budgets are jeopardized. This is the paradigm that the House and Senate tax plans should be reviewed through.

Comparing the benefits of each plan for individual Mississippians

In the first place, it is essential to consider how large a tax cut would need to be in order for it even to make a difference in the lives of Mississippians. To quantify the impact that each tax reform package could have, it can be helpful to compare tax cuts against what the private sector defines as a meaningful pay raise.

According to the Conference Board, a world-respected analytics organization that tracks pay raise trends, median salary increases sit at approximately 3.5 percent. In other words, income increases substantially below this amount are below what the private sector might consider to be a meaningful increase in income.

Under the House plan, a Mississippian making a gross income of $40,000 a year would get an approximate $1,500 reduction in taxes through eliminating the income tax, according to a summary published by the House of Representatives. This translates to an approximate net income increase of 3.8 percent. Thus, such an increase would be something Mississippians could genuinely benefit from, just as they might benefit from a similar pay raise at work.

This is contrasted with the Senate plan. Under the Senate plan, a Mississippian making a gross income of $40,000 a year would get an approximate $260 reduction in taxes. This would be a mere 0.65 percent net income increase, which is hardly something that would bring substantial tax relief. In addition, although the Senate plan removes the 4 percent bracket from the income tax, there is no path in the plan that aims towards the total elimination of the state income tax.

 A broad tax cut cannot be called transformative for Mississippi incomes if it is not even the equivalent of a basic pay raise. Thus, when comparing the two plans, the Senate plan is less effective than the House plan when the two plans are measured in light of their positive impact on everyday Mississippians. Tax cuts would be good for Mississippians, even in small amounts. However, a tax reform proposal that does not accomplish its stated goal to give a meaningful reduction in taxes should be revised at a very minimum.

The impact of the tax plans on the state budget and economy

Granted, increases in taxpayers’ take-home income may greatly benefit Mississippi on an individual level, but some would look back to the consideration of the two plans from the state budget angle. In determining how much taxes to cut, a key consideration has been whether such tax cuts would have a negative effect on the state’s budget and fiscal responsibility.   

Mississippi’s state budget is in some of the best shape it has ever been in. Some of the funds are due to an influx of federal funds, but the state also has among the highest state tax revenue collections it has ever had. Thus, while some may argue that it is not a good time for a widespread tax cut and removal of the income tax, it is unlikely that a better time will come about in the foreseeable future.

Instead of the state government simply spending the money itself, money is in the best position when it is in the hands of the private sector. According to the Mercatus Center, several studies have suggested that while private sector investment grows the economy, government spending can actually harm the economy in some cases, by pushing out the private sector in favor of government programs.

Additionally, in light of the excess revenues, it is fiscally responsible to put the money back into the hands of the people. In the wake of the economic struggles of the pandemic, along with the challenges of inflation and Bidenomics, the time has come for Mississippians to at least get meaningful tax relief from their own state.

After all, if an elected government has a balanced budget and an excess surplus, what better course of action than to return the money to the taxpayers it came from? The House plan does the best job at accomplishing this.

It's time for real tax relief in Mississippi

Mississippi needs real tax relief. While both the Senate and House plans give commendable tax cut proposals for the state's people, the House plan carries the most promise as a catalyst for true tax relief and long-term growth. Rather than merely giving Mississippians tax breaks that are well-intentioned but non-transformative, the time has come for state leaders to give the people meaningful tax relief.

My apologies for not getting you a legislative update these past few weeks. I have been out of the office for two weeks of Army National Guard training. It feels good to be back, and I’m very glad to be spending more time walking through the Capitol than walking through the woods.

Without further delay, here’s a quick catch up on some of the good, the bad, and the interesting from this week:

The Good:
- HCR 39 from Speaker Philip Gunn would create a new initiative process that would allow Mississippians to make their voices heard. This is a major win for all those who wanted to see a revival of the initiative process in some capacity.
- HB 599 from Rep. Dana Criswell and Rep. Brady Williamson extends important accountability and transparency measures to counties and municipalities. This will guarantee that citizens have more clear access to how their local governments are run.
- HB 917 from Rep. Jansen Owen ensures the freedom to operate for home-based businesses. A record number of new businesses were created during the pandemic, many of these, home-based. These entrepreneurs should be applauded, and we support all efforts to guarantee their continued freedom to operate.
- SB 2797 from Sen. John Polk would require state agencies to report potential deficits and necessitate that they work with the state auditor’s office to reduce expenses. This is a positive way to tighten budgets and eliminate government waste of taxpayer money.

The Bad:
- SB 2731 reduces the income reporting requirements for food stamp recipients and increases the potential for welfare waste and abuse. With the massive amount of fraud that already exists within our welfare systems, there is no reason to loosen existing accountability measures. We need to ensure these programs are helping those they’re meant to, not those that want to cheat the system.

The Interesting:
- The Legislature is considering a vast range of pay raises for government employees across the state. Those individuals may very well deserve a pay raise, but I just wish the average Mississippian would see their pay increase as consistently as our public servants’ salaries do.
- HB 1487establishes the song “One Mississippi” by Steve Azar as our official state song. Personally, I think I prefer the Kane Brown version.

There’s a lot moving at the Capitol right now, I’ll do my best to keep you updated as we continue to fight for liberty here!

All the Best,

Hunter Estes
Senior Director, Policy & Communications

Ps. Be sure to follow our Facebook and Twitter pages for detailed updates about the legislative session. Check out our Legislative Tracker, too.

The Mississippi Senate recently passed Senate Bill 2731 which would lower reporting requirements for the recipients of food stamps. Under current law, Mississippi food stamp recipients are required to report any change in income above $125. Under this legislation, no income reporting would be necessary unless the recipient knows that the income would make them ineligible.

Technically referred to as the Supplemental Nutrition Assistance Program (SNAP), the program uses a combination of state and federal dollars to provide food assistance to families under a certain income level. In order to ensure that only those who qualify to receive the benefits, current state law requires recipients to report any increase in income of $125 or more. Upon receiving information about income increases, the Mississippi Department of Human Services (MDHS) reviews the income level to assess continued eligibility.

That would change under Senate Bill 2731. Instead of requiring recipients to report any notable income changes, this bill would require recipients only to report if their gross monthly income is above 130 percent of the Federal Poverty Level (FPL). Thus, the accountability essentially switches to an honor system rather than requiring recipients to report any potential change. In other words, recipients would be the ones who would have to calculate whether income increases only if it affected their eligibility and then notify MDHS.

Of course, such an honor system raises obvious concerns that some recipients might not even report their eligibility change at all. But there are more basic concerns to be raised. Even if a well-meaning recipient did their due diligence to determine if an income increase made them ineligible, determining the income cap is no simple matter either.

The Federal Poverty Level used to calculate eligibility changes based on several factors, including gross monthly income, the number of people in the household, net monthly income, as well as whether or not a household member is elderly or disabled. Depending on the circumstances, the gross monthly income limit is $1,396 for some people and $4,347 for others, with additional thresholds in between and above these numbers.

As a practical example, the government may tell a recipient what their income cap is when they first get on food stamps. If someone moves out of the household, the FPL income cap will decrease, and a recipient may not even realize that they have a new income cap to watch for if they increase their income.

The proposed change would lead to the system being ripe for confusion, mismanagement, and waste. Instead, Mississippi should stick with a system that places the responsibility for tracking and calculating eligibility into the hands of MDHS. The current system accomplishes this by income reporting that the department internally reviews.

As an entity that is accountable to elected officials, MDHS should continue to be responsible for ensuring that the food stamp program does not waste taxpayer dollars on ineligible recipients. Placing expectations on the food stamp recipients to voluntarily review any income increases to assess their eligibility is shortsighted at best. This burden should be placed on MDHS as the entity that has been given the trust of these taxpayer funds. Funds must not be wasted on those who are not even eligible for redistributive programs like food stamps. Keeping the current requirement for food stamp recipients to report any $125 income changes is a vital step for true accountability to happen.