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Can state really afford tax cuts?
by By Charles Dunagin Enterprise-Journal
Aug 14, 2014 | 98 views | 0 0 comments | 2 2 recommendations | email to a friend | print
There’s going to be a lot of momentum in the Legislature next session for some kind of tax cut, given that 2015 is an election year. State revenues are on the increase, and the rainy day fund is healthy, so the argument can and will be made that the state can afford it.

That is unless you consider a number of places where Mississippi should spend more on such things as highways, education and health care.

Both Gov. Phil Bryant and Lt. Gov. Tate Reeves advocated giving taxpayers some relief in speeches at the Neshoba County Fair last month, and there’s no doubt the rest of the Republican leadership at the state Capitol will jump on board if they haven’t already.

The most obvious place for a cut will be on state income taxes for individuals and corporations, both of which now top out at 5 percent.

With the exception of seven states that have no individual income tax, Mississippi’s income tax rate is already low when compared to other states, especially on higher incomes. But that isn’t going to stop the arguments to make them even lower, and we suspect those arguments will prevail.

The tax situation in Mississippi is something of a dichotomy.

While elected officials at the state Capitol are talking about lowering taxes, many local public officials across the state — those in charge of cities, counties and school districts — are working on budgets in which tax increases are being considered.

Streets, roads and highways are going without needed funding.

The Mississippi Adequate Education Program is not being fully funded, and threatened lawsuits and a proposed constitutional amendment are being advocated by some to address that problem.

Municipal officials advocate for local sales tax options to fund capital improvements.

So, while one branch of government is claiming to be flush enough with cash to give the “taxpayers a raise” many of those same taxpayers may have to use it to pay more property taxes and utility fees at the local level.

State leaders might be better advised to leave the present income tax rates as they are and direct whatever excess funds the state collects to cities and counties to help pay for infrastructure repairs and improvements and to school districts by simply fully funding MAEP. But that’s probably a harder political sell at the polls next year than bragging about a tax cut and “starving the government beast.”

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