The tax train zoomed through the Mississippi House of Representatives. What Ways and Means Committee chair Trey Lamar calls “one of the most transformational pieces of legislation that this state has ever seen” got referred to his committee on Friday, Jan. 10, and passed out of the House the next Thursday.

 

The 107 page bill would eliminate the state personal income tax (with exceptions) by 2037, cut the state sales tax on groceries from 7% to 2.5% by 2036, replace the 18.5% sales tax diversion to municipalities with a 1.5% local sales tax, add a new county sales tax of 1.5%, add a 5% sales tax on top of the existing 18.5 cent-per-gallon state tax on fuel, and move millions of dollars in funds from one agency to another. (The local taxes would still apply to groceries.)

 

Speaker Jason White and his team clearly do not agree with Gov. Tate Reeves that income taxes can be eliminated with no increase in other taxes. Added taxes in their bill recoup about half the cost of the income tax cut.

 

Clearly House leaders believe future revenue growth will be sufficient to cut current revenues by $1.1 billion. No triggers to delay cuts should revenues fall are included in the bill.

 

House leaders clearly have no problem taxing taxes. The proposed 5% sales tax on fuel sales would tax the 18.4 cent-per-gallon federal tax and the 18.5 cent-per-gallon state tax on gasoline (the federal tax on diesel is 24.4 cents per gallon). Eliminating the tax on taxes was a key selling point for passing the 1987 highway bill.

 

House leaders clearly have no problem burdening elderly and low-income taxpayers while benefitting high-income taxpayers. For example, the thousands of Mississippians on food stamps, many of whom work, would get little benefit from the grocery tax cut or the income tax cut, but would pay up for non-grocery and gasoline purchases. The income cut along with the grocery tax cut should more than offset increased sales and fuel taxes for high-income taxpayers.

 

The House’s tax train will likely slowdown in the Senate. Lt. Gov. Delbert Hosemann has said the state should be guarded in cutting taxes, citing declining growth in tax collections. He insisted the state needs a “balanced approach to taxation” and should keep a low personal income tax as a revenue source.

 

His approach cuts personal income taxes to 3% and the sales tax on groceries to 3.5%. With the state keeping municipalities sales tax share whole, this eliminates the need to increase local sales taxes and avoids the 5% tax on tax for fuel sales. Hosemann said his approach also provides the state sufficient revenues to fund roads and bridges.

 

Given our history of revenue shortfalls and underfunded programs, it might be wise to ride the slower train for a while.

 

Crawford is the author of “A Republican’s Lament: Mississippi Needs Good Government Conservatives.”