WASHINGTON — As negotiations on a final tax-cut package continue on Capitol Hill, Mississippi’s Republican congressmen say they are backing the proposal because they think it will turbocharge the state’s economy and make businesses more competitive.
In interviews with Mississippi Today on Capitol Hill, the Republican members were on the same accord that legislation — now facing final revisions after separate versions passed the House and Senate — will help individuals by providing an average $1,200 tax refund, simplify the federal tax code and help Mississippi corporations create more jobs.
The state’s only Democrat serving in Congress, Rep. Bennie Thompson, voted against the House tax bill and expressed strong views against the bill after Senate passage.
U.S. Rep. Trent Kelly represents much of north Mississippi, including the Golden Triangle region, which has experienced an economic development burst in recent years, and fast-growing DeSoto County. Kelly, who lives in Saltillo, believes that the Republican-backed plan will promote development in those areas and, hopefully, to parts of his district that haven’t shared in the economic boom times.
The plan calls for lowering the tax rate for U.S. corporations to 20 percent, which supporters say puts America more in line with the rates of other industrialized nations.
“At 35 percent, we’re higher than a majority of countries we compete with, which makes it easier for businesses to go elsewhere. I don’t know that we want to be the lowest tax rate in the world, but we do want to have a competitive rate,” Kelly told Mississippi Today during an interview at his office at the Longworth Building.
Both versions would apply sweeping reforms to corporate taxes. But lawmakers will have to patch problems with the corporate alternative minimum tax rate, which could nullify the value of other tax incentives also included in the bill and significantly lower revenue.
The Senate bill would create seven individual income tax brackets: 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent and 38.5 percent. Those brackets would expire at the end of 2025.
The House bill would create four individual income tax brackets: 12 percent, 25 percent, 35 percent and 39.6 percent. Those brackets would be permanent.
The House bill would completely eliminate the “death tax,” a tax on wealthy estates left to heirs. The Senate bill would levy the death tax on fewer people by doubling the exemption to levels to $11 million for individuals and $22 million for couples, but it does not kill the tax.
“The tax scam that we saw pass the Senate on Saturday morning hurts the middle and low-income communities that I serve in the second congressional district,” Thompson said in a statement. “As the House prepares to vote on it yet again, I along with my Democratic colleagues oppose this legislation that harms millions of hard-working Americans.”
A Gallup poll last week found that 29 percent of Americans approved of the bill, while 56 percent disapproved, while a Quinnipiac University poll found that 29 percent approved and 53 percent disapproved.
“I supported this important legislation because it is the best opportunity in 30 years to improve the federal tax code,” U.S Sen. Thad Cochran said in a statement minutes after the bill passed last week. “The Senate bill would lower taxes for Mississippians.”
“Lowering the tax burden and simplifying the law will also help generate economic growth by making businesses in Mississippi and across the country more competitive,” said Cochran.
“This proposal would be good for job creation and good for small businesses,” U.S. Sen. Roger Wicker said in a statement last week. “It would mean millions of middle-class Americans keep more of their hard-earned dollars. And it would mean that American businesses can compete on a global stage.”
“The next step will be to work with the House of Representatives to iron out differences in our proposals and deliver these tax cuts for the American people,” said Wicker, who is up for re-election in 2018. National Republican strategists see passing a tax cut as a vital arguing point for re-electing GOP members of Congress.
“Politically, it’s imperative if Republicans hope to maintain control in the House and the Senate,” said Rep. Greg Harper. “You’ve got to have a signature win, and this is that.”
The sentiment that cutting corporate taxes will benefit everyone is echoed by Republican U.S. Rep. Steven Palazzo, who represents south Mississippi, including the Gulf Coast. Palazzo, who serves on the House Appropriations Committee, points to one of the state’s largest employers —government contractor Ingalls Shipbuilding — as another potential beneficiary.
“The corporation itself is going to receive a tax break. Not knowing what their current tax structure is but if it’s the 35 percent (tax rate) and it goes to 20 percent, it’s going to provide more money to the stakeholders and shareholders,” Palazzo said.
“I’m hoping with this tax reduction that Ingalls shipbuilders are going to get a pay raise and shareholders are probably going to see a dividend increase,” Palazzo said.
The Republicans who spoke to Mississippi Today point to gains in the stock market as evidence that Wall Street, where investors rallied after the House passed its version of the plan, is enthused about the tax cuts.
Critics of the legislation, including House Democrats, say it favors corporations and the wealthiest Americans while lower income taxpayers will see little benefit.
“It raises taxes on the middles class — millions of middle-class families across the country; borrows trillions from the future — from our children and grandchildren’s future to give tax cuts to the wealthiest; encourages corporations to ship jobs overseas; and the budget ransacks Medicare — half-a-trillion cut from Medicare and Medicaid,” said House Minority Leader Nancy Pelosi, D-Calif.
Added Thompson: “This tax reform bill does nothing but aid the rich in getting richer and the poor in getting poorer.”
Harper, of Pearl, who represents a district that cuts catty corner through the state’s midsection, refutes those claims.
“I think there are plenty of things here, and everyone will see some sort of reduction in their tax rates. Any amount of money, whether it’s $1,200 a year or whatever it might be, and some that will move into the zero category that will get a reduction because they won’t be paying anything,” Harper said.
The Mississippi GOP delegation agrees that a tax reform deal will be a political win for Republicans, who failed to repeal the Affordable Care Act despite repeated vows and efforts to do so since the bill passed in 2010.
“I would say a lot was learned by the failure to repeal and replace Obamacare in the Senate this year. That was a great learning process because on the tax reform, it was very coordinated,” Harper said.
Lawmakers from both the House and Senate are tasked with finding compromise on fundamental differences and drafting a final bill, with the goal of sending it to the president’s desk by Christmas.