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SENATE PASSES $575 MILLION TAX RELIEF PLAN
Plan would boost GDP, increase investment in state
JACKSON– The state Senate voted today to provide $575 million in tax relief to Mississippians and spur economic growth, said Lt. Gov. Tate Reeves. The Taxpayer Pay Raise Act heads to the House for consideration.
Senate Bill 2858, sponsored by Finance Chairman Sen. Joey Fillingane, R-Sumrall, passed in a large bipartisan vote, 39-11. The bill is similar to a compromise plan presented in 2015 that was killed by House Democrats.
“This plan moves Mississippi toward a flatter, fairer tax policy that allows individuals to keep more of their hard-earned dollars at home to spend and invest,” Lt. Gov. Reeves said. “As a conservative Republican, I believe Mississippi can reduce the size of government and direct funds to priorities like public schools and infrastructure while putting more money back into taxpayers’ pockets.”
The $575 million tax relief plan includes:
Eliminating the 3 percent and 4 percent tax brackets levied on income,
Reducing the overall tax burden on small business owners, and
Removing the investment penalty, or franchise tax, on businesses’ property and capital.
Eliminating the franchise tax alone would have grown the state’s GDP by $282 million and added 3,514 jobs within 10 years, according to a Mississippi State University study. Reeves’ plan would be phased in over a 10- to 15-year period, allowing the state’s economic performance to grow while reducing taxes.
A large number of Mississippians are self employed and would benefit from the Taxpayer Pay Raise Act.
“Mississippi Realtors are appreciative that one component of Senate Bill 2858 would allow Mississippi’s self-employed to deduct up to one-half of their self-employment taxes paid to the state,” said Lisa Hollister, President of the Mississippi Realtors. “Not only would this benefit Realtors, but it would also benefit many of our clients who are also self-employed. Claiming this deduction could absolutely mean the difference for those clients in being able to afford the down payment and closing costs on a new home.”
Eliminating the franchise tax is about leveling the playing field for Mississippi businesses in the marketplace.
“Charging Mississippi businesses a penalty for simply having property and capital in the state simply doesn’t make sense,” said Trent Mulloy, president of Laurel Machine and Foundry Co. “I have seen other states use the fact that Mississippi has a franchise tax to lure small businesses away and grab those jobs and investment. The franchise tax is a business cost that I pay but my competitors in other states don’t have.”
Without the franchise tax, Mulloy said his company would be able to invest and grow by adding workers and equipment.
Mississippi banks also pay the franchise tax, which means the institutions have less money to lend in communities.
“The franchise tax is truly a penalty on capital investment,” said George Marx, CEO of Copiah Bank, N.A. in Hazlehurst and chairman of the Mississippi Bankers Association. “Most states have done away with the tax, and it’s time for the Mississippi Legislature to do the same thing. If we can remove this punitive tax, banks will collectively have millions of dollars freed up to lend to Mississippi individuals and businesses, which will have a significant impact on economic growth and development.”
