Taxing more goods and services, accelerating tax cuts, eliminating taxes on stocks and bonds and simplifying the tax code for married couples were among suggestions raised at a special legislative panel Monday.

The legislative group – made up of 13 Republican lawmakers, five Democratic lawmakers and a governor’s appointee – is reviewing Mississippi’s tax policy.

Lt. Gov. Tate Reeves, R-Florence, and House Speaker Philip Gunn, R-Clinton, who co-chair the committee, said earlier this year that “everything is on the table” when it comes to reforming the tax code, including reversing the $415 million tax cut passed this year — even raising taxes.

“I understand that (implementing proposed reform) is not easy,” Tax Foundation economist Nicole Kaeding told lawmakers Monday morning after her presentation. “I have a benefit – no political considerations, I don’t live in Mississippi. … But I think what you can learn from other states is that really the place to start is not thinking about these recommendations, but instead the mission for Mississippi. Where do you want to be in 10 years, five years, next year?”

Kaeding continued: “The conversation at this point needs to go there. Once you set the vision, it’s easy to pick and choose what to focus on. The vision setting is the very difficult part.”

The recommendations Monday were based almost solely on Tax Foundation 2016 state rankings, which were released last week. In the rankings, Mississippi’s overall tax code ranked 28th in the country, and a law passed in 2016 that will phase out the three percent individual and corporate income tax and the franchise tax should improve the ranking once it goes into effect in 2018, Keding said.

Mississippi sales tax structure, ranked 38th, and property tax structure, ranked 35th, were the two areas of focus Monday morning.

Mississippi imposes a sales tax on business-to-business transactions such as farm equipment, manufacturing machinery and business leases. Kaeding suggested eliminating those transactions to further promote business growth and imposing sales taxes on items that are not currently taxed under the sales tax structure like gasoline sales, legal and financial services, medical and veterinary services and fitness and barber services.

“Your sales tax base has gotten very small,” Kaeding said. “That means your rate is higher than it otherwise would be. The more goods you tax, the lower the taxes on those goods can be. The fewer goods you tax, the higher the rates are on those few things.”

Kaeding said speeding up the complete elimination of Mississippi’s franchise tax (currently scheduled to occur in 2028) and eliminating its intangibles tax, which taxes the value of stocks, bonds, trademarks and other intangible properties. Kaeding said the intangibles tax, which is virtually unregulated in Mississippi, discourages banks from expanding capital and opening new branches.

The two-hour meeting at the Capitol Monday morning sparked probing questions from lawmakers. Sen. Juan Barnett, D-Heidelberg, launched a lengthy conversation about Internet sales tax. Mississippi does not have laws or regulations in place that tax companies like Amazon who sell goods online.

“Internet sales take away from the mom and pop stores in Mississippi,” Barnett said. “Why aren’t we talking about that today?”

Congress is currently mulling a number of bills that would more uniformly regulate online transactions. Kaeding said the Tax Foundation’s stance on the issue is that Congress should regulate Internet sales because they are considered “interstate sales,” and she cited potential legal problems if the state were to introduce its own legislation on the issue.

Rep. Mark Baker, R-Brandon, suggested Mississippi follow Alabama’s lead and pass a law that would tax internet sales.

“I believe we should follow Alabama as closely as possible and get ourselves in line for litigation,” Baker said.

Sen. Willie Simmons, D-Cleveland, and Rep. Sonya Williams-Barnes, D-Gulfport, suggested the panel hear from another non-governmental agency with a different perspective on Mississippi’s current tax code.

The Tax Foundation is nonpartisan, but advocates for conservative fiscal policies. Representatives from the Tax Foundation will be on hand the remainder of the working group’s hearings, Reeves and Gunn said during the meeting.

“The joint panel would like to hear from others in addition to the public comments we are receiving from [email protected],” Hipp said. “However, I wouldn’t expect them to grant a public forum to a liberal Washington, D.C. think tank that wants to raise income taxes across the board because that’s not what Mississippi families want or need.”

After hearing the reform suggestions, Reeves and Gunn encouraged lawmakers to begin thinking about what they would like to see Mississippi accomplish moving forward.

“In my personal view, we can both cut taxes and grow revenue,” Reeves said. “If you reduce taxes on capital, if you attract more capital to the state, you’re going to increase revenue. There are going to be a lot of people who opine … But in reality, if we can create more taxpayers, we can grow our economy.”