RUSS LATINO: Driving up the abolition of income tax | opinion

0
90
  RUSS LATINO: Driving up the abolition of income tax |  opinion

In Greek mythology, Sisyphus was sentenced to forever to push a boulder up a hill. Modern advocates of government tax reform can relate to it. A failed experiment in Kansas was a cautionary story to lawmakers considering changes in tax law.

Only the Hill of Kansas is a mirage – an obstacle to misperception, not substance. In 2012, the state began aggressive income tax cuts. Between 2012 and the lifting of the Kansas tax cuts in 2017, the state saw record employment in the private sector, with employment growth ranking among states that rose 10 places after tax cuts. The state also broke the record for start-ups in 2012, 2013, 2014 and 2016.

Kansas reminds us of two things. First, the size of a state’s treasury and the well-being of the population of a state are not the same. Second, there are two sides to the tax coin. In the year the state cut, it increased government spending by $ 432 million. Tax revenues continued to rise after the cuts, just not as quickly as the legislature could spend.

House Bill 1439, which left the Mississippi House of Representatives, would gradually eliminate Mississippi income tax. It seeks to climb the hill of Kansas by providing a way of maintaining state revenue with reasonable limits on spending growth. Unfortunately, thoughtful approaches are often complex approaches that are not easy to understand and easy to misrepresent.

In 2022, HB 1439 would significantly increase the tax exemption for Mississippi workers so that an individual earning $ 47,700 or a married couple earning $ 95,400 would not pay state income taxes. This would mean thousands of dollars being kept in the pockets of Mississippi workers to be spent on their families, in their communities, and on growing their businesses.

Contrary to Kansas law, the bill would offset the loss of income tax revenue by shifting to consumption taxes and broadening the tax base. With increasing income in the following years, HB 1439 would gradually increase the available income tax exemption until the state income tax was completely repealed.

Complete elimination was predicted by year 10. The forecast depends in large part on another important feature of the legislation – a strict tax rule that limits government spending growth to 1.5 percent per year.

HB 1439 tries to thread a narrow needle. On the one hand, by implementing offsets and revenue requirements, it provides counter-argument for critics warning that tax changes would affect the government’s ability to provide core functionality. Second, government spending limits are introduced that are among the best in the country, while achieving long-term net tax cuts.

But is the juice worth the complicated squeezing process? Answering this question takes some honesty. Mississippi’s tax revenue has increased by nearly a third over the past decade. As a percentage of our economy, we have the 17th highest tax burden in the nation.

Meanwhile, households in Mississippi have the lowest median income in America, with inflation negative for the past decade, adjusted for inflation. Our economic and population growth has stagnated equally while we have the second lowest labor force participation rate in the country.

The abolition of income tax is not a miracle cure, but it is an important step beyond the status quo. Nine other states already operate without income tax. These nine states have tax burdens that are roughly half that of Mississippi’s, while state revenues are growing at a much faster rate. How? Their populations and economies are growing by leaps and bounds not only across Mississippi but also across the nation, with more than double the national population growth average and economic growth 36 percent above the national average.

In a recent report published by Empower Mississippi, Jorge Barro, Ph.D. The economist at Rice University’s Baker Institute examined the potential impact of the Mississippi income tax elimination. Dr. Barro noted that the abolition of income tax – even if offset by an upward revision of excise taxes – would help Mississippi, if done right, significantly and increase productivity, income levels, economic growth and property values. Through empirical research, he also found a likely positive effect on population growth.

There will be a legitimate debate in the coming weeks to ensure that the shape of the legislation maximizes impact. It’s good. There will be critics who are motivated by political, ideological, or self-interest. That is to be expected. But if conservatives can keep an eye on the price, we can push the boulder over the hill and set a new example of what good tax reform looks like here in Mississippi.