JACKSON — Lt. Gov. Tate Reeves said Monday that current weakness in state revenues won’t discourage him from pushing a long-term plan for tax cuts, including the elimination of the state’s corporate franchise tax.
“I don’t think revenue in any one day, or any one month, or quite frankly, any one year ought to determine long-term tax policy,” the Republican said. “What we should do is we should create long-term tax policy that makes economic sense for our state.”
Reeves spoke to Mississippi State University’s Stennis Institute of Government and the Capitol press corps, laying out his thoughts on the 2016 legislative session, which begins Tuesday. Reeves will take office for his second term as lieutenant governor Thursday.
The lieutenant governor, who earlier served two terms as state treasurer, said lawmakers face a budget shortfall, but he said the amount remains manageable. Revenues are running about $54 million below forecast in the first six months of the state’s budget year, and the state Medicaid program is reporting a $52 million shortfall.
“It’s certainly not challenges that the Legislature hasn’t seen before and it’s certainly not challenges that we are not capable of dealing with,” Reeves said, noting the Medicaid shortfall has decreased from a previously projected $71 million.
Saying that revenues are still growing, but at a slower pace than a few years ago, Reeves called for moving ahead with plans to cut not only the corporate franchise tax, but some individual income taxes, unemployment fund taxes on employers and self-employment taxes.
Reeves said he hasn’t finalized the exact outlines of his proposal. Last year, he supported a $555 million tax cut, which would have phased in income tax cuts of up to $350 a year for individuals making at least $18,300 a year. That package also included a plan to eliminate the state’s $242-million-a-year corporate franchise tax — a 2.5 percent levy on business property or capital employed. Business groups, especially banks and manufacturers, dislike franchise taxes because they apply not only when a business is profitable but also when it’s losing money
“It is, I believe, the stupidest tax on the books in Mississippi, because it discourages capital investment by Mississippi businesses in Mississippi, because it taxes capital,” Reeves said.
Reeves called for re-examining some tax credits and incentives, citing a recent legislative report that found the state only got about 50 cents back for every dollar it spends on tax credits subsidizing movie and television production. Reeves also said he would support an increase in historic preservation tax credits but not as large as the amount sought by some supporters.
“A tax credit is no different than an expense,” he said.
Reeves didn’t commit to supporting any specific proposal to raise money for roads and bridges. The Mississippi Economic Council last month proposed increasing taxes by $375 million to improve maintenance.
While he again lambasted President Barack Obama’s health care overhaul, Reeves also didn’t commit to any specific plan to aid Mississippi’s rural hospitals.