House leadership quietly crafted income tax overhaul, lawmakers scrambled ahead of vote

Caleb Bedillion, Northeast Mississippi Daily Journal, Tupelo
·6 min read

Feb. 26—JACKSON — As late as Tuesday morning, only hours before a 2 p.m. gavel time in the House of Representatives and a vote on a lengthy bill to eliminate the state income tax, some lawmakers themselves were still racing to get up to speed.

"It's a whole lot to wade through on that bill," Rep. Jerry Turner, R-Baldwyn, told the Daily Journal Tuesday morning.

Turner, a fourth-term lawmaker, backed the intent of House Bill 1439: Cut the personal income tax within a decade and raise sales taxes to compensate.

But though the concept of cutting the income tax has been "talked about in theory for years," Turner said, the Republican caucus in full was only first briefed this session on the "nuts and bolts" of HB 1439 during a GOP caucus meeting on Monday afternoon.

"That was before the bill was printed and carried to committee," Turner said.

That committee, Ways and Means, approved the bill in short order, with House leadership bringing the 308-page to the floor for a full vote in less than 24 hours. An amendment would stretch it to 317 pages, ultimately.

"The concept is a great idea. But getting it all worked out is a big thing," Turner said, hours before he cast a vote in favor of the bill. "When you do these shifts like this, you can expect nothing less than everybody being affected by it. This goes from top to bottom, from side to side. Everybody is going to be affected by it, and to what degree, we don't know."

»WHAT YOU NEED TO KNOW: Here are the details of the income tax elimination bill

»RELATED: Economic, business leaders hesitant on proposal

Another member of the Northeast Mississippi delegation in the House was willing to describe the process as "kind of rushed," but believes ample time remains in the lawmaking process for deliberation.

"I would have liked to see us have more time," said Rep. Randy Boyd, R-Mantachie. "But we know it's going to go through the process, it's going through the other end of the building and then coming to us. Somebody had to bring it out sometime."

Like Turner, Boyd learned of the legislation on Monday during a closed-door GOP caucus meeting — and then found himself standing with House leadership during a Tuesday morning press conference to tout the bill.

House Democrats were also caught off-guard, said Minority Leader Robert Johnson, D-Natchez. Johnson voted in favor of the bill, but not before he and other House Democrats scrambled late Tuesday morning to hold a meeting and ensure there was no "Trojan horse" buried in it. Many other Democrats ultimately opposed the legislation.

Even after the vote, Johnson said he still had not had time to read the entire proposal.

Tuesday morning, Johnson had labeled the legislation "extremely rushed," arguing such a sweeping tax proposal is not a bill to be rammed through within days.

How the bill was written

So who, actually, was involved in crafting of HB 1439? The top three Republicans in the House of Representatives, primarily.

Rep. Trey Lamar, R-Senatobia, told the Daily Journal he met with Speaker Philip Gunn, R-Clinton, and Speaker Pro Tempore Jason White, R-West, shortly after the 2019 election to discuss their priorities for the current four-year legislative term.

At the top of their list, he said, was "major, comprehensive tax reform."

They conferred with certified public accountants, the state Department of Revenue, and other experts including guidance the Tax Foundation had provided dating back to 2016 legislative hearings on tax reform that the conservative think tank had been involved in, both Lamar and Gunn said. But Lamar said there had been no outside study or organization that shaped the bill for the trio of lawmakers.

"We wrote the bill ourselves," Lamar said of Gunn, White and himself.

The three lawmakers did study Kansas as a tax reform case study they hoped to avoid, Lamar said.

Kansas tax cuts widely seen as warning

In 2012 and 2013, Kansas lawmakers passed deep cuts to both personal income as well as business income taxes, legislation that had been molded by the conservative American Legislative Exchange Council. Then-Gov. Sam Brownback, a Republican, promised the cuts would put a "shot of adrenaline" into the economy and create tens of thousands of jobs.

They ultimately had the opposite effect.

Kansas revenues fell dramatically and led to cuts to education and other critical services. By 2017, the Legislature had nixed the tax-slashing experiment and restored the income taxes they had eliminated. A Democrat was elected governor in 2018, a rebuke of Brownback's experimental fiscal policies.

Kansas' legislation did not include a provision to significantly raise sales taxes to help compensate for the loss of revenue in income taxes, or find sufficient revenue elsewhere to make up for the dramatic losses caused by the cuts. HB 1439 does do that.

The Parents' Campaign, a state education advocacy group, pointed to both Kansas and another state that attempted and failed at a conservative tax overhaul, Oklahoma, as examples to avoid. The group said it is concerned the proposal would further hurt education funding in the state and could hamper future teacher pay raises as well as the state's early childhood education programs.

"Folks, nobody particularly likes taxes," the organization wrote on Facebook. "But we sure do like the things our taxes provide — like our public schools and our public school teachers. There's nothing wrong with examining our tax structure and making improvements. But that's just the point. There has been no examination of these sweeping revenue changes."

Empower Mississippi, a conservative policy think tank in the state that supports eliminating the income tax, released a study on Thursday suggesting that HB 1439 avoids some of the major flaws of the Kansas tax cut.

Though the Empower study was begun last year and does not directly consider the new legislation, it favorably considers somewhat longer phase-in times, revenue triggers and spending controls — all features of HB 1439.

Previous tax cuts

In 2016 a joint legislative committee met to discuss tax reform and hear presentations from the conservative Tax Foundation. The presenter, Nicole Kaeding, was given a round of applause by lawmakers at the time.

The meetings had followed dozens of tax cuts passed by the Legislative in prior years, including the largest in Mississippi history earlier in 2016. That legislation by 2028 will have fully phased out a $260 million-a-year corporate franchise tax and a substantial portion of personal income taxes — a $415 million annual hit to the state's revenues.

Republican backers argued the cuts would jolt the economy. Opponents, including Democrats, said it was unwise given already-declining state revenues.

Agency budgets and state services have faced repeated cuts in recent years. Mississippi's economic growth has long lagged behind most other states — at times requiring emergency slashing and dips into the state's rainy day fund to cover costs. The state has struggled to pay for adequate mental health services, correctional facility upgrades, teacher raises, road repairs and state park renovations, to name just a few.

Despite those hardships, Republican lawmakers have continued to advocate for additional tax cuts, citing their convictions on small government.

On Tuesday — despite still sifting through the numerous intricacies of the bill — all but one House Republican voted to approve HB 1439.