
State tax collections through September – the first quarter of the new fiscal year – are 4.1 percent or $51.1 million above the amount collected during the same period last year.
Numbers compiled by the staff of the Legislative Budget Committee and recently released show that most major categories of tax collections, with the exception of use tax collections, have grown during the year over year window.
Gov. Phil Bryant, Lt. Gov. Tate Reeves and other members of the state’s political leadership have cited the bump in revenue collections during the past year as proof of a strong economy and strong fiscal condition for the state.
On social media, Bryant said Wednesday in response to the latest revenue report, “Great year for revenue in Mississippi. Almost $40 million more in September than projected” by state’s financial experts. For the year collections are $77 million or 6.4 percent above the estimate. Experts had made a cautious revenue estimate because collections have been sluggish in recent years.
“Mississippi is now in better fiscal condition than anytime in the state’s history,” the governor said last month on social media.
Still, a recently released study by the Pew Trust, a nonprofit that among other things studies states’ policies and trends, found that as of the fourth quarter of 2018, Mississippi was one of 10 states that had not regained its pre-2008 peak in revenue collections when adjusted for inflation. Mississippi, the study found collected 1 percent less revenue in the fourth quarter of 2018 than at its peak prior to the 2008 recession when adjusted for inflation. In other words, the state still had less buying power than it did before the so-called Great Recession.
Louisiana collected 2 percent less when adjusted for inflation while the other states contiguous to Mississippi collected more – Arkansas, 6.2 percent; Tennessee, 15.7 percent; and Alabama, 0.3 percent.
And both Pew and the Tax Foundation also cite the federal tax cuts passed during the Trump administration, as helping to grow revenue for the states.
“Revenue collections have been boosted in part by the 2017 federal Tax Cuts and Jobs Act— which cut federal income tax rates but increased what many individuals and businesses owed to state tax collectors,” the Pew study said. While the federal law reduced the overall rate of taxes on income, it broadened the base of collections. States, including Mississippi, follow federal law, at least in part, on deductions allowed, but do not follow federal law in reducing or increasing the rate of taxes on income, according to the Tax Foundation.
Darrin Webb, the state economist, also recently told legislative leaders the federal changes have positively impacted revenue collections in Mississippi.
In addition, the 2018 ruling by the U.S. Supreme Court allowing states to levy the 7 percent tax on retail items purchased via the internet – called use taxes – also has been a boon for states, according to Pew and the Tax Foundation.
Still use tax collections for Mississippi are down 7.7 percent or $5.3 million for the first quarter of the current fiscal year, which began July 1.
But for the fiscal year completed June 30, use tax collections were up 23.7 percent or $62.4 million. That fiscal year began soon after the Supreme Court ruling allowing states to collect taxes on internet sales.
Mississippi’s corporate income tax collections, spurred at least in part by the change in federal law, are up 19 percent or $17.3 million, according to the September report.
The two largest sources of state revenue – sales tax collections and the personal income tax collections – also are up through the first quarter of the fiscal year. Sales tax collections increased a modest $9.6 million or 2.3 percent and personal income tax collections were up 4.3 percent or $19.8 million.
Casino tax collections were essentially flat – down 0.50 percent or $169,703 for the quarter.
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