Home » MBJ FEATURE » Tax credit ‘pass-through’ part of Hosemann’s business legislation proposals

Tax credit ‘pass-through’ part of Hosemann’s business legislation proposals

One piece of Secretary of State Delbert Hosemann’s legislative bundle seeks to wring more use out of a jobs tax credit the state makes available to business start-ups in Mississippi.

What the bill would do is allow for an employee “pass-through” of a jobs tax credit that currently benefits only business owners.

“What it does is if you had an entity, a corporation or an entity that’s being taxed, and you’ve just started out, you probably didn’t make money the first year,” Hosemann said. “Most businesses don’t. So you have job credits and other things that accrue to the business that are not used.”

Although the state has obligated itself to awarding the credit, there is no taxable income to trigger it, so it lies dormant.

Employers who would otherwise be ineligible for the jobs tax credit could shift it to their employees in $250 increments, according to the legislation, which hasn’t officially been filed yet, but will be before the bill deadline next month, Hosemann said.

Hosemann said he and his staff consulted with the Mississippi Department of Revenue in arriving at the $250 increments, “so we don’t have a bunch of $8 credits or something like that” awarded.

“For example, if I had a $50,000 jobs tax credit and I had 200 employees, I could give each of them $250 worth of credit on their personal income taxes,” Hosemann said. “(Business owners) can give them to their lowest-paid employee or their highest-paid employee. We left them flexible, but it’s the same dollars that we obligated to give them as a credit for coming here anyway.”

A primary benefit of allowing an employer-only tax credit to pass through to employees, Hosemann said, is it would make Mississippi more competitive with neighboring state Tennessee in attracting new industry. Tennessee has no personal income tax. Mississippi does, and Hosemann said that puts economic developers — especially those close to the Tennessee border in North Mississippi — at a disadvantage.

“Of course, they’re taxed really at a higher level than we are, based on property taxes and a few others, but it sounds good to say that there’s no income tax. It’s a barrier to us attracting industry here. This makes me competitive with Tennessee, because now I don’t have any personal income tax, either.”

In 2010, Mississippi and Tennessee both offered what were termed by a company spokesperson “very generous” incentives for Pinnacle Airlines to expand its corporate headquarters and locate its 600 employees. At the time, Pinnacle’s total number of employees nationally had just grown to nearly 8,000 after it bought Mesaba Aviation from Delta Airlines. The move made Pinnacle’s corporate headquarters a trophy economic development project.

One of the sites Pinnacle considered was in DeSoto County. The company ultimately picked Memphis.

“Now we’re using it at the employee level, instead of it sitting there not being used, or in the case of Tennessee, being used against us,” Hosemann said.

BEFORE YOU GO…

… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.

If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.

Click for more info

About Clay Chandler

Leave a Reply

Your email address will not be published. Required fields are marked *

*