Tax credit ‘pass-through’ part of Hosemann’s business legislation proposals
Published: January 15,2012
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.
To sign up for Mississippi Business Daily Updates, click here.
Twang & Tourism: The Country Music Trail
FOLLOW THE MBJ ON TWITTERMy Tweets
Top Posts & Pages
- Three indicted, alleged to have embezzled from agency
- MARTIN WILLOUGHBY — Tyler Raborn finds success and fulfillment with Raborn Media
- Judge to hear from True the Vote as McDaniel attempts to overturn loss to Cochran
- DAVID DALLAS: Mr. McDaniel goes to Washington
- Under state probe, All American Check Cashing gets ‘F’ rating from Better Business Bureau
- Manning family establishes health care initiative at UMMC
- Walker sentenced to 18 months for fraud, conspiracy
- Weyerhaeuser investing $57M to modernize lumber mill
- Supreme Court deals blow to McDaniel's election challenge