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The conservative Tax Foundation has been House Speaker Philip Gunn’s spirit animal in his ongoing push to eliminate the state’s income tax and shift to “consumer taxes” such as a higher state sales tax.

But on Monday, even the Tax Foundation panned Gunn’s proposal to overhaul the state’s tax base by phasing out the income tax and cutting taxes on groceries while increasing sales, use and “sin” taxes. This after Gunn said the Tax Foundation’s teachings — notably at a series of hearings Gunn hosted in 2016 — that “consumer taxes” are better and fairer than income taxes were an impetus for his proposal.

A week after Gunn rolled out his sea-change tax bill with little heads up even to much of his own GOP House caucus, he appears to be on an island politically.

Farmers, teachers, business leaders, conservatives, progressives, the lieutenant governor and Senate, the governor — who himself advocates eliminating the income tax — have expressed skepticism, if not outright opposition, to Gunn’s proposal. They have differing reasons, but there appears to be some consensus that the proposal should have been more thoroughly vetted, had more people’s input and more transparency before it was rolled out and passed by the House in less than 24 hours.

“Policymakers and taxpayers alike should be able to see a public fiscal note for the plan to ensure it meets lawmakers’ goals,” The Tax Foundation wrote in its new report. “… Broadly speaking, taxes on consumption are more economically efficient than taxes on income … When it comes to making major changes to the tax code, however, details matter.”

PODCAST: House Speaker Philip Gunn discusses his proposal to cut income tax, raise sales tax

The Tax Foundation surmised that Gov. Reeves’ proposal — reducing the income tax rate without the personal tax exemptions and offsetting tax increases Gunn proposes — “would provide a more stable path to phaseout.” Reeves said that while he appreciates Gunn promoting a phaseout of the income tax, he opposes the commensurate increases in other taxes.

The Tax Foundation noted that the plan so far failed to provide “reliable revenue projections and a detailed accounting of how much revenue is projected to come from each offsetting change.”

The Tax Foundation warned that some of Gunn’s sales tax increases to offset the income tax phaseout — particularly on manufacturing machinery, farm equipment and other “intermediate transactions”— could cause “tax pyramiding.” Tax pyramiding is where the same good or service is taxed multiple times through the chain of production. The foundation said this would put some Mississippi businesses at a competitive disadvantage, and these tax costs would be passed on to consumers.

The foundation also warned that Gunn’s proposal to raise income exemptions until all taxpayers are exempted, as opposed to Reeves’ proposal to reduce tax rates, would increase the chance that the phase-out efforts would stall down the road, “with there being less political will to continue putting revenue growth toward further reductions.” It also “would affect the marginal rates at which investment decisions are made,” the foundation said, with small business owners who pay primarily individual, not corporate, income taxes, facing the same rate on marginal income, “initially limiting the impact on encouraging additional investment.”

One of Gunn’s selling points on his plan — and a way to combat complaints of more regressive taxation hurting people with low incomes — is the companion cut to grocery taxes, from 7% to 3.5% within five years.

The foundation said there is “empirical research suggesting that the higher general (sales tax) rates necessary to offset a reduced or zero rate on groceries have more of an impact on lower-income consumers than does the inclusion of groceries at the ordinary rate.” This is, in part, the foundation said, because groceries purchased with welfare dollars are already exempted from sales taxes.

“Above that threshold, grocery purchases tend to scale well with income,” the report said, and an ideal sales tax structure is one that “applies to a broad base of final consumer purchases at a single rate, while exempting business inputs to prevent tax pyramiding.”

Gunn has said he believes his proposal “is based on sound tax policy.” And as for folks opposed to it because their industries would see increases in their specific sales taxes, such as farm equipment, he said they’ve had low rates and have not been paying their fair share.

Both statements may be true. But the realpolitik is that Gunn created instant opposition from some powerful interests, such as the farm lobby and manufacturers, who would see sales taxes on their machinery increase from 1.5% to 4%.

Gunn and his top lieutenants included a teacher pay raise — that had been proposed in separate bills — in the tax overhaul. This would appear to be a sweetener to draw support for the measure and to show that many teachers would have thousands of dollars more in their pockets each year from tax cuts instead of just the $1,000-a-year raise.

But despite — or actually because of — this inclusion, many teachers have been angered, saying they’re again being used as political pawns. Public education advocates and lobbies have voiced opposition because they fear the long-range shakeout of income tax cuts will mean less spending on public education.

Gunn’s rapid rollout of the tax plan was apparently a hurry-up offense to avoid some early opposition. But that appears to have had an opposite effect in many corners, particularly with Lt. Gov. Delbert Hosemann and the Senate, whom Gunn needs onboard to pass the proposal.

Hosemann on Monday said he still hasn’t finished going through the bill, has many unanswered questions and, “The Senate is not Nancy Pelosi, we don’t adopt it and figure out how it will work after we pass it.” He said he is asking the state economist to run modeling on the plan and others to scrutinize it. He said he is unsure whether that could be completed by the end of this year’s legislative session.

READ MORE: Hosemann cites problems with House tax bill, but won’t rule out action on it this session

The Tax Foundation, like Reeves, Hosemann and other fellow Republicans and fiscal conservatives, praised Gunn for broaching the state tax structure issue, even if they have reservations about or issues with his proposal.

“Make no mistake: This is a bold plan from state lawmakers,” the foundation said. “A change worth doing is worth doing right … With the bill now headed to the Senate, lawmakers should take the time that remains to ensure that the final legislation is sustainable and will enable Mississippi to meet its goals.”

The post Is Gunn on a political island with tax overhaul plan? appeared first on Mississippi Today.

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Lt. Gov. Delbert Hosemann did not rule out passing a version of the massive tax restructuring bill approved last week by the Mississippi House even though he cited what he said were multiple problems with the legislation.

Still, Hosemann, speaking publicly about the bill for the first time, left the impression that if the bill makes it out of the Senate before the March 16 deadline it will be dramatically different than the proposal that passed the House. And, based on Hosemann’s comments, it is far from a certainty that the bill will survive the deadline.

“I have not had one senator come to me and tell me he wants to pass this bill,” said Hosemann, speaking Monday during a video conference to Mississippi State University’s Stennis Institute of Government and the Capitol Press Corps. “…The Senate is not Nancy Pelosi. We don’t adopt it and find out how it will work after we pass it.”

Later, responding to a question, Hosemann said he was not belittling the approach of Speaker Philip Gunn who introduced and passed his Mississippi Tax Freedom Act in less than 24 hours. When asked why there was not more communication between House and Senate leaders before the bill was taken up, he said, “You will have to ask the speaker that.”

But he said, “I don’t think it any secret the speaker and I are personal friends. He has a tremendous heart and tremendous love for Mississippi, but that doesn’t make him right all the time.”

Hosemann praised the speaker for bringing forth legislation aimed at providing tax relief and reducing government spending.

“I am receptive to that idea,” he said. But “This bill is extremely long and has several unintended consequences.”

He said such unintended consequences could lead to an economic slowdown and a reduction in state revenue that might impact vital state services.

The bill, authored by Gunn, would phase out the state’s personal income tax over a 10-year period, reduce the sales tax on groceries by one-half to 3.5% and increase the sales tax on most other retail items by 2.5 cents on each dollar spent. The state’s current sales tax is 7% on most general sales tax items with lesser amounts such as 1% to 3% on primarily “big ticket” items, such as farming equipment, airplanes, vehicles and manufacturing equipment.

The bill would provide a near immediate substantial tax cut, exempting in 2022 the first $50,000 in income for a single person and the first $100,000 for a married couple.

Hosemann said the bill could negatively impact farmers, manufacturers and others. He cited retirees who generally do not pay a state income tax as a group that could be negatively impacted by the sales tax increase. He did not take into account the fact they would be paying less in grocery taxes under the legislation.

Despite citing issues with the bill, Hosemann did not rule out passing a version of the legislation this session.

He said he has asked the state economist “to model out” what could be the consequences of the legislation. Hosemann also did not rule out the issue being studied during the summer, presumably with the purpose of tackling similar legislation in the 2022 session.

Gov. Tate Reeves has proposed phasing out the state income tax, which provides about one-third of the state general fund revenue, without raising other taxes to make up for the loss revenue.  Reeves said the tax cut will spur economic growth, leading to new revenue for the state.

Gunn has said his proposal would “broaden” the tax base by levying taxes on consumption rather than income. He has argued that if the bill becomes law, an average Mississippian earning $50,000 per year would have to spend about $82,000 in a year to pay as much in sales taxes as the taxpayer would save from the income tax cut.

The post Hosemann cites problems with House tax bill, but won’t rule out action on it this session appeared first on Mississippi Today.

Thousands of residents in Jackson are still without water service two weeks after a historic winter storm slammed the state, freezing and bursting many water pipes in the capital city.

Officials cannot estimate how many residents are without water in Jackson, the state’s largest city that is at least 80% Black, and they cannot say definitively when water service will be restored. Pockets of west Jackson and a majority of south Jackson are the areas hit hardest by service disruptions — a reality officials attribute to the distance between these neighborhoods and the city’s water treatment plants.

Over the course of the water crisis, 80 water main breaks and leaks have been reported across the city. As of Sunday night, the city’s water maintenance department had completed 51 repairs. Crews completing the repairs have described city pipes, some over 100 years old, as brittle, underscoring the need for a vast overhaul of the city’s aging infrastructure.

“We are glad to see that the process is working. While it isn’t working to the speed we would like to see, we are glad to know that we are on the right track,” Jackson Mayor Chokwe Antar Lumumba said during a Sunday press conference. “We’re not happy until we can restore water service to every single last person in this city.”

Meaningful infrastructure repairs have been put off for decades by city leaders, who have had to craft budgets in recent years with a diminished tax revenue base. Lumumba has estimated that updating Jackson’s water system to prevent future crises would cost around $2 billion, which is more than six times the city’s annual budget.

“If Jackson don’t do something to fix all of its aging pipes here, I’m afraid we just might be the next Flint, MI,” one resident said on the city’s Facebook page.

City crews traveled around areas of south and west Jackson yesterday, opening up fire hydrants to release trapped air out of the water system that had built up after water reserves were depleted during the winter storm. 

Charles Williams, Jackson’s public works director, said on Sunday that the city had restored water pressure to its targeted 90 pounds per square inch (PSI) at the OB Curtis water treatment plant. Along with maintaining that pressure, recovery now depends on their ability to distribute water throughout the system.

Many residents have complained on the city’s Facebook page and support lines that car washes near their homes are still operating while their neighborhoods are still without water. 

“Stop saying conserve and do something. Stop the car washes. We have lived with inadequate water for years,” a resident wrote on the city’s Facebook page. 

Citizens who have experienced significant leaks due to burst pipes are asked to keep copies of the plumbing statements for their repairs so they can apply for a leak adjustment to their bills from the Water Sewer Business Administration (WSBA).

The entire city is still under a boil water notice, and residents with water services are being asked to lower their consumption as much as possible to speed up the restoration of city reserves.

“Ultimately what we need from the state and federal government is long-term support so we can weatherize these facilities,” Lumumba said.

READ MORE: Winter storm prompts review of Mississippi’s electric, gas, water infrastructure

No update has been given on when or if the state will request federal disaster relief to aid state and local relief efforts. On Feb. 23, Gov. Tate Reeves said that county and municipal agencies were working on damage reports and that he would request federal aid when those were completed. As of Monday afternoon, damage reports were still coming in to the Governor’s office. For Reeve’s to request a federal emergency declaration, a cumulative threshold of $4.5 million in reported damages has to be reached.

Last week, the state secured more tanker trucks of non-potable water for Jackson, and Reeves deployed the Mississippi National Guard to assist with Jackson relief efforts. 

Non-potable (flushing) water will be available on Monday from 9 a.m. to 6 p.m. at the following locations:

• Forest Hill High School – 2607 Raymond Road, Jackson, MS 39212
• Raines Elementary School – 156 N. Flag Chapel Road, Jackson, MS 39209
• Callaway High School – 601 Beasley Rd, Jackson, MS 39206
• Provine High School – 2400 Robinson St, Jackson, MS 39209
• New Mt Zion Missionary Baptist Church – 140 Maple St, Jackson, MS 39203
• Davis Road Park – 5901 Terry Road Byram, MS 39272
• Walton Elementary School – 3200 Bailey Avenue, Jackson, MS 39213

The post Thousands of Jackson residents enter third week without running water appeared first on Mississippi Today.

Speaker of the House Philip Gunn sits down with Mississippi Today Editor-in-Chief Adam Ganucheau to discuss his massive tax proposal, which would eliminate the state’s personal income tax, cut the highest-in-the-nation grocery tax, and raise the sales tax and several other taxes.

Listen here:

The post Podcast: House Speaker Philip Gunn discusses his proposal to cut income tax, raise sales tax appeared first on Mississippi Today.

Mississippi’s voter identification requirement could be at risk if the state Supreme Court strikes down the medical marijuana initiative approved by voters in November.

After all, the same process employed to put medical marijuana on the ballot was used in 2011 to enact a mandate that Mississippi voters must have a government-issued photo identification to vote.

Would it not make sense that if one was improperly on the ballot then so was the other?

Perhaps the Supreme Court could or would walk a tight rope and rule that it is too late to challenge the voter identification requirement since it has been in effect for a longer time.

In the case of medical marijuana, the city of Madison filed a lawsuit before the November general election challenging the process used to gather the signatures to place the issue on the ballot.

When the initiative process was placed in the Constitution in the early 1990s, Mississippi had five congressional districts. To successfully place an initiative on the ballot, signatures must be obtained equally from all five of those districts. The state now has four congressional districts making it mathematically impossible, the city of Madison contends in its ongoing lawsuit, to meet the constitutional mandate.

For countless initiative efforts since Mississippi lost a U.S. House seat based on the 2000 Census, initiative sponsors had been striving, based on the instructions they received from the Secretary of State, to gather one-fifth of the signatures from the five congressional districts in effect in the 1990s. Everyone accepted that as a commonsense approach.

But then along came the city of Madison and its lawsuit. The Supreme Court punted on deciding the issue before the November general election, but it has now agreed to hear oral arguments on the case in April.

If the Supreme Court does strike down the medical marijuana initiative, it only makes sense that some group would file a lawsuit demanding that voter identification also be found invalid.

Incidentally, the only other initiative to make it completely through the process and be approved by voters since 2000 was a Farm Bureau-sponsored proposal that prevents the government from taking private property through eminent domain for the use of another private entity. Farm Bureau argued that eminent domain should only be used to take private property for public use, such as for roads. Voters in 2011 agreed with Farm Bureau by an overwhelming margin. That year, 63% voted in favor of the requirement that a person had to have a government-issued photo identification to vote, and 73% approved the Farm Bureau proposal limiting the use of eminent domain.

It could be less likely that the eminent domain initiative would be challenged should the court rule against medical marijuana. But what is a certainty is that many voting rights groups oppose voter ID, saying it has a history of suppressing voter turnout among minorities. On the other hand, state Republicans hailed the voter ID requirement as a major victory when it was passed.

Many state Republican leaders now are hoping the state’s high court strikes down the medical marijuana initiative. Many state leaders have lamented that the initiative severely limits the ability of state and local governments to regulate and to tax what could be a lucrative marijuana industry.

Earlier this session, Lt. Gov. Delbert Hosemann expended considerable political capital to garner the votes to pass a bill in the Senate to create a medical marijuana program that would go into effect should the Supreme Court strike down the initiative. Hosemann’s effort to pass the bill led to the Senate being in session to near 2 a.m. earlier this month.

The bill, which is now pending in the House, places many more restrictions on the medical marijuana program than does the initiative. Perhaps the biggest difference is that the Senate bill gives the state the authority to levy taxes on the program, with a large portion of the revenue from the taxes designated for education.

It almost appears the Senate is sending a message to the Supreme Court justices that voters will not be too mad if the initiative is struck down because there would still be a medical marijuana program under the Senate bill. Interestingly, Hosemann counted his enactment of the voter ID program approved by voters as one of his crowning achievements during his tenure as secretary of state.

To ensure that achievement remains intact, Hosemann might need to develop a voter identification bill just in case that proposal also is struck down by the courts.

The post Mississippi voter ID law could be struck down by anti-medical marijuana ruling appeared first on Mississippi Today.

Let’s just hope that the variants don’t cause the boulder to roll back down the hill.

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We want to share the experiences of Mississippians getting a COVID-19 vaccine. Whether you’ve already received both doses or are still trying to book an appointment, this form is for you.

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