Reeves to Unveil Tax Proposal

By Jeff Amy/Associated Press

JACKSON – Embracing one of the business community’s long-held tax reduction goals, Lt. Gov. Tate Reeves will propose eliminating the franchise tax on business capital Tuesday as part of a larger package of tax cuts.

Senate Finance Committee Chairman Joey Fillingane, R-Sumrall, confirmed that Reeves will propose a phased-in elimination of the $220-million-a-year franchise tax today. He said it also will include tax relief for individuals.

“I think you’re going to see, once the plan is unveiled, that all the taxpayers in the state are going to get relief,” Fillingane said Monday.

A spokeswoman for the Republican Reeves didn’t respond to requests for comment Monday. The individual tax cuts were less clear, and Fillingane declined to provide details.

Sen. Debbie Dawkins, D-Pass Christian, said business tax breaks aren’t reaching average people.

“It’s supposed to encourage job production, but I don’t see it happening in my community,” Dawkins said.

With state revenues having climbed back from recession lows, tax cuts are much on the mind of lawmakers as the 2015 elections approach. Republican Gov. Phil Bryant is also endorsing the elimination of the franchise tax. House Ways and Means Committee Chairman Jeff Smith, R-Columbus, said House members are discussing a 10-year phase-out of the franchise tax, and said he also expects an individual income tax cut.

The franchise tax is a 2.5 percent levy on business property or capital employed. Industries like banks and manufacturers dislike franchise taxes because they apply whether a business is profitable or losing money. According to Tax Analysts, a publication on taxes, 18 states impose a franchise tax. West Virginia and Pennsylvania have become the latest to repeal theirs in an attempt to court business.

If the Mississippi plan succeeds, it will kill a second large tax that businesses have long sought to cast off. In 2012, lawmakers agreed to phase out the state’s tax on business inventory. By 2017, the Legislative Budget Office projects its elimination will cost the state $126 million in lost revenue.

Mississippi lawmakers have passed 34 bills granting more than $350 million in tax relief since 2012, according to calculations by the Legislative Budget Office and the Associated Press, with the vast majority going to businesses. At the same time, lawmakers keep falling far short of funding K-12 schools and community colleges at levels demanded by law.