Harrison: Governor Tate Reeves embarks on bitter fight against Capitol income tax


Below is a political analysis column by Bobby Harrison:

House Speaker Philip Gunn said of the governor’s comments on Thursday: “We’re two days away from the deadline and we’re seeing his first proposal (from Reeves). My question is: “Where are his votes?”

Just two days before a key legislative deadline, Gov. Tate Reeves confidently said lawmakers will vote to eliminate the state income tax that generates about a third of Mississippi’s general fund revenue.

Reeves, who has little legislative power during the regular session, did not say he would call a special session or veto budget bills or other items if lawmakers did not send him a proposal. elimination of income tax. But those actions would be the governor’s main leverage in any battle with lawmakers.

“I am prepared to do whatever it takes to eliminate the income tax in Mississippi,” the first Republican governor said. “We’re going to work together over the next few days to make that happen… We’re going to eliminate the income tax in Mississippi.”

Reeves made his statement Thursday at a press conference in his state Capitol office as lawmakers prepare to begin key negotiations on crafting a budget and finalizing other major proposals. Work is expected to continue on the budget and other key bills throughout the weekend to meet key deadlines as we approach the scheduled conclusion of the session on April 3.

The House agreed with Reeves’ goal of phasing out the income tax. President Philip Gunn has cited the elimination of income tax as his most important priority and has presented several proposals to that end.

But Senate leaders, led by Lieutenant Governor Delbert Hosemann, stopped short of the complete elimination of the income tax, which is the state’s second-largest source of revenue. Senate leaders instead offered an alternative proposal that simply cuts income tax and would still be the biggest tax cut in state history.

Gunn, in an effort to reach a compromise with the Senate on Wednesday, presented his latest proposal to the Senate – a more modest plan to phase out the $100 million a year income tax, meaning he would take 18 years or more to complete.

“While I appreciate the House’s attempt to secure a compromise, their $100 million (cut) first year plan is far too little, and their 18 years to implement it are far too long,” said Reeves.

Gunn said the $100 million a year income tax phase-out plan was not what he wanted, but that he was trying to reach a compromise with the Senate.

Of Reeves’ proclamation that the income tax elimination proposal would pass this year, Gunn said: “We’re two days away from the deadline and we see his first proposal (from Reeves) . My question is: ‘Where are his votes?’ »

Gunn said he would support the governor calling an immediate special session if a compromise is not reached by this weekend, which is the deadline for the regular session to agree on the issue.

On Thursday, Reeves proposed to cut income tax by $600 million in calendar year 2023 by lowering the top marginal rate from 5% to 3.5%. He said it would reduce everyone’s tax liability by about 30%. According to his proposal, the marginal rate of 3.5% would then be reduced by half a percent per year until it is eliminated. Mississippi currently has three tax rates, although the 3% rate is being phased out under a bill passed in 2016, meaning there would be a 4% rate on income above $5,000 and 5% on income over $10,000 less exemptions. Under Reeves’ plan, there would only be a 3.5% rate from 2023 that would be reduced by half a percent each year.

Reeves said Mississippi is experiencing unprecedented tax revenue growth. Mississippi financial experts, the governor said, predict the state will collect about $1.2 billion in revenue more than the $5.8 billion that was budgeted in the 2021 legislative session for the current exercise.

“It’s time to give that money back to taxpayers,” Reeves said.

State Economist Corey Miller and others have cited the unprecedented amount of federal COVID-19 relief funds flowing into the state as the main reason for the surge in revenue. He said most other states are experiencing similar tax collection booms.

Because tax revenue is not expected to continue at its current rate, Hosemann said it would be more prudent to consider tax cuts, but not eliminate income tax altogether.

“The Senate has proposed $439 million in recurring tax cuts in addition to the $235 million ($674 million total) that have yet to be phased in from the 2016 cuts,” Hosemann said. in a recent press release. “This is a Conservative plan to give the taxpayers money back. In the many hours we have spent in the House on this issue, we have not said that we never support the elimination of income tax in Mississippi.

“We can face further reductions at any time,” Hosemann continued. “Taxpayers expect us to be responsible stewards of taxpayers’ money. The Senate plan includes cutting taxes and taking over basic government services — not gutting them.

Previous House and Senate proposals also reduced the 7% food tax, which is the largest state tax on food in the country. Reeves did not advocate reducing the tax on groceries, but said he would not oppose it as long as the income tax is eliminated in the process.

— Article credit to Bobby Harrison of Mississippi Today —

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