Differing tax cut plans advance in Miss. House, Senate

JACKSON – Lt. Gov. Tate Reeves' $382 million tax-cut proposal was big, until fellow Republican House Speaker Philip Gunn rolled out his own $1.7 billion plan to eliminate Mississippi's personal income tax.

The Senate voted 38-9 Tuesday for Reeves' plan to phase out Mississippi's business franchise tax over 10 years and reduce some income taxes, with Reeves calling Senate Bill 2839 a "responsible plan that provides meaningful tax relief."

The step toward a long-held goal of the business community was in danger of being obscured by House Republicans' proposal, though, as election-year tax-cutting efforts continued to escalate.

"We as Republicans decided that if we're going to do a tax cut, and that is going to be a matter of discussion, we want it to be real," Gunn, of Clinton, said in a Tuesday news conference at the Capitol. "We want it to be significant. We want it to count, and we want to give meaningful tax relief to the working families of Mississippi."

Opponents say the nation's poorest state can't afford to sacrifice revenue needed to pay for services and say the plans would mainly benefit better-off Mississippians.

The House Ways and Means Committee voted 15-7 Tuesday to approve Gunn's plan, House Bill 1629. It will need a 60 percent majority to pass the House, though. Democrats, who control enough votes to block such measures, signaled opposition, saying Mississippi needs more money for roads, schools and other items.

"I think it's playing very loose with public policy," said Rep. Steve Holland, D-Plantersville. "We've always had extraordinary needs, and I think this philosophy is wrong-headed that you give it back to the people and it prospers the economy."

Republican Gov. Phil Bryant, who initially proposed a $79 million income-tax reduction aimed at people earning less than $53,000 a year, faces re-election this year along with Reeves. Most legislators of both parties also are running for new four-year terms.

Gunn said the House plan would trim nearly $1.4 billion in taxes in steps through 2028, pausing in any year when state revenue didn't grow by at least 3 percent. However, that total is based on partial collections from the 2012 calendar year, according to the state Department of Revenue. The state income tax is projected to collect more than $1.7 billion in personal income taxes this year.

The proposal could shift the debate away from proposals to cut business taxes. Gunn's plan would leave the $242 million-a-year franchise tax on business capital intact, as well as the $300 million-plus corporate income tax.

Opponents warn Gunn's plan means Mississippi's remaining taxes would fall more heavily on the poor, as a proportion of income. Projections from the liberal-leaning Institute on Taxation and Economic Policy show the lowest-earning 20 percent of taxpayers, making $16,000 or less, would save an average of $13 a year. Those in the top 1 percent of income, making $324,000 or more, would save $22,862 on average.

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•House Bill 1629: http://bit.ly/1BP1XV4, Senate Bill 2839: http://bit.ly/1EO6ogK