SCOTT: Several important post-April tax developments
by For the MBJ
Published: June 14,2013
As another year’s tax day filing deadline came and went, several interesting, and potentially significant, tax-related developments surfaced that have a direct or indirect impact on us here in Mississippi. One development took place next door in Louisiana, another here, while the third emanates from Washington, D.C.
First, in Baton Rouge in early April, Gov. Bobby Jindal reversed course on a full court press to eliminate the state income tax and various corporate taxes. Under his proposal, the revenue would have been made up by increasing the sales tax rate and expanding its reach. While still supporting the concept, Jindal wanted the Louisiana legislature to devise its own plan. Recently, legislative leaders killed the idea entirely for this year’s session.
Many states annually consider changes to their tax codes. However, for the Louisiana plan to replace the lost income tax revenue, the sales tax rate would have to increase significantly, and many exemptions would have to be removed. This created backlash from both the left and the right.
On the one hand, some said that the regressive nature of the sales tax would result in an additional undue burden on those least able to pay. On the other hand, business leaders decried a “new tax,” such as taxation of business services previously exempt. The end result was no change, but lots of acrimony.
Here in Mississippi, our own tax structure is like Louisiana’s in certain respects, and we compete with Louisiana for new business all the time. However, there is no major move for a complete revamp of our tax code. Instead, our statewide leaders, from Gov. Phil Bryant and the Mississippi Development Authority (MDA) down, deserve great credit for designing a fiscal package of tax breaks and incentives (but with real clawbacks) to land the new Yokohama tire plant for West Point.
This approach of economic development and job creation by partnering with established companies to produce more, and higher-paying, Mississippi jobs (and taxpayers) is a tried-and true approach with a good return on investment. Just ask the more than 40 states that reportedly fought for and lost out on Yokohama, including perhaps our friends next door.
Finally, in Washington, D.C., the “Marketplace Fairness Act” is gaining traction. This bill, just passed by the U.S. Senate, would allow states to collect sales tax from large online retailers just as they do from local brick-and-mortar stores.
While estimates vary widely, one study suggested that up to $23 billion in annual sales taxes are uncollected by the states from e-commerce. Whether Mississippi’s share is $20 million or $200 million, those are real dollars that could be used for education, health care, transportation or a host of other needs.
Significantly, and importantly, this is not a new tax. Technically, use tax is due on these purchases anyway, but the enforcement is very difficult. Also, the bill before Congress has an exemption for small online businesses (less than $1 million in online, out-of-state sales) so as not to deter smalls and start-ups.
This is legislation whose time may have finally come.
Who says tax season ends on April 15th?
John Scott, CPA, is tax partner at HORNE LLP who has more than 20 years of public accounting experience serving as a tax advisor to corporate, flow-through and individual clients. Sign up for HORNE Tax Alerts at www.horne-llp.com
To sign up for Mississippi Business Daily Updates, click here.
Twang & Tourism: The Country Music Trail
Still planning that summer vacation?
FOLLOW THE MBJ ON TWITTERMy Tweets
Top Posts & Pages
- Seafood R’evolution set to make Mississippi ‘the new culinary epicenter of the South’
- Yarber could be sworn in today as new Jackson mayor
- Silver Airways ordered to continue service
- Pharma Pac lays off rest of workers; could end up owing state
- Ole Miss launches commitment to be 'climate neutral'
- After review, MSU moves forward on new research facility
- Bryant signs controversial abortion ban bill
- SpaceX, Stennis officially open new rocket test stand
- Plans unveiled for large shooting range on Coast