By BOBBY HARRISON
House Speaker Philip Gunn, R-Clinton, said national conservative groups have endorsed his plan to decrease Mississippi’s tax on personal income and increase the levy on motor fuels – gasoline and diesel – to pay for transportation needs.
Part of the speaker’s plan is to lower the income tax – funds that normally go for education, health care and law enforcement – by about $160 million over a four-year period and increase the motor fuel tax by 8 cents per gallon over a four-year period.
Gunn said during a meeting of the Mississippi State University Stennis Institute of Government/Capitol press corps luncheon Monday that the American Legislative Exchange Council and the Tax Foundation – both conservative nonprofit national research organizations – had endorsed his plan.
“This is solid tax policy,” said Gunn of his plan.
When the House speaker unveiled his plan last week, Lt. Gov. Tate Reeves, who presides over the Senate, said he is opposed to increasing the gasoline tax, but supports lowering the income tax.
Gunn said, “Our intent is for this to be revenue neutral.”
He said conservative groups believe use taxes, such as the tax on motor fuel, is a better way for states to generate revenue than taxes on personal income and corporations. He said a tax on motor fuel would be “a fairer tax” because it would capture taxes from many people who are not paying the income tax.
The Gunn proposal is to phase out the 4 percent tax bracket that is levied on income above $5,000. Thanks to changes made in tax law by the Legislature in 2016, the phase out of the 3 percent tax bracket on the first $5,000 of income will be underway in the coming years.
If Gunn’s proposal is approved to phase out the 4 percent bracket, the only state income tax would be 5 percent on income above $10,000. In reality, though, the tax liability for most Mississippi families, because of exemptions and deductions, does not kick in until income of $8,300 for a single person with standard deductions and of $19,600 for a married couple with two children.
Gunn said eliminating the 4 percent tax bracket would help poor people.
But others contend the tax shift would hurt working people because they are required to pay a greater percentage of their income for gasoline than do the more affluent families. For instance, a poor person would be spending a greater percentage of his or her income to drive to work than would a more affluent person.
“An income tax cut would benefit the most affluent, and corporations (that pay the same rate as on personal income) and especially out-of-state corporations,” said Sen. Hob Bryan, D-Amory.
Gunn’s proposal also would divert $110 million in use tax (also earmarked for education, health care and law enforcement) to transportation.
In total, Gunn’s proposal would divert about $280 million from education and other agencies to transportation.
Gunn said he is hopeful an agreement can be reached with the Senate and that Gov. Phil Bryant will call a special session to deal with transportation issues.
The Legislature already has passed multiple tax cuts in recent years that when fully phased in will reduce state revenue by more than $700 million for education, public health and law enforcement.
Gunn said the state can absorb additional cuts to those programs while increasing funds for transportation. Most agree additional funds are needed for transportation both on the state and local levels.
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