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1 Joseph Henchman, The Right Prescription for Mississippi 1 (2008)

handle is hein.taxfoundation/ffbdjxz0001 and id is 1 raw text is: FISCAL FACT August 2008 No. 139 The Right Prescription for Mississippi By Joseph Henchman In early 2008, Mississippi Governor Haley Barbour announced the creation of the Mississippi Tax Study Commission, which is tasked with preparing a comprehensive study of the state's tax system and recommending suggested improvements. The Commission, which brings together members with a wide range of business, legal, academic, and legislative expertise, has been instructed to prepare a report of its findings by September 2008. The Mississippi Tax Study Commission has released its draft report of recommendations, and has begun voting on final recommendations. There is both good and not-so-good in the list of proposals. The Good o Eliminate the franchise tax. The report proposes, as a long-term goal, phasing the tax out over five years. This economically damaging part of Mississippi's tax code (imposing a $2.50 levy for every $1,000 in capital that is held, invested, or employed by a business) hits firms even when they are not profitable, and the burden of calculating it prevents Mississippi from attracting multi-state and multi-national corporations. Because many of Mississippi's neighbors still levy this tax, it would provide a regional comparative advantage. Its abolition would give Mississippi a boost, even if the revenue were made up elsewhere. o Flatten Corporate Tax Rates. The report recommends eliminating two corporate tax brackets and taxing all corporate income at the top rate of 5 percent (the same top rate as individual income taxes), and exempting the first $10,000 of taxable income. Keeping the rates the same reduces the incentive to shift income between the two systems, and sticking with one rate reduces complexity. Arguments for progressive rates, whatever their merit in the individual income tax context, are illogical in the corporate income tax context. The - - - - - - - - - - - - - - - - as RL M, a FOUNDATION: