What Tax Reform Means for You (and your Neighbor)

Posted: Dec 19, 2016 10:28 AM
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What Tax Reform Means for You (and your Neighbor)

Ever continues the quest for who first uttered the phrase “there are only two sure things in life – death, and taxes.” Of course, the latter is one whose deleterious effects may be minimized through proper tax policy. Partisan gridlock may have captured Washington by the Achilles for the past 30 years, but the quest for responsible tax and fiscal policy is not so difficult in the states. As we look forward to the year ahead, and plan policy priorities for next legislative session, we should not forget to look back at what tax relief and budget reform has meant for America’s families.

There is a strong correlation between state tax rates and charitable giving, with a 1 percent increase in a state’s total tax burden associating with a 1.16% percent decrease in charitable giving. When people get to keep more of their own money, it helps them provide better for their families, but it also helps them help others as well. Private charity fills in gaps for the needy in communities where the government cannot.

Personal income growth is one of the best anti-poverty programs around, and unsurprisingly, it averaged almost 16 percent higher in the nine states with no personal income tax than in the nine highest income tax states. The benefits of pro-growth tax reform are deeper than simple numbers on a government balance sheet.

In early May, Governor Phil Bryant of Mississippi signed into law the Taxpayer Pay Raise Act, reforming the state’s tax code to make it more competitive, revving the engine of economic growth, and allowing families, individuals, and employers across the state to keep more of their hard-earned paychecks. We could get into the nitty-gritty of where the money was saved and prioritized, but frankly, it obscures the real meaning of the reforms. In total, Mississippians will save more than $400 million per year as the phase-ins complete.

But what does this mean for you and your family? In total, you could provide a full Christmas dinner to more than 7.9 million people with that tax relief. That is more than double the entire state population of Mississippi! Put another way, based on spending data, Mississippians will feel about a quarter less of a monetary burden on their total holiday spending this year thanks to the tax relief. That is real money, back in the pockets of real, hardworking taxpayers.

Heading even further south, residents of the Sunshine State will save nearly $550 million thanks to a budget and tax relief package signed by Governor Rick Scott in mid-April. Among many miscellaneous reductions, the deal reduces taxes on communications services, cell phone bills, and property. Most importantly, it permanently eliminates the sales tax on manufacturing machinery and equipment, ending yet another part of harmful business-to-business taxation that unnecessarily adds to end consumer costs. You are probably wondering what kind of sunshine this tax relief will bring to your life and the lives of those you care about. Florida’s tax relief could buy nearly 43 million 8lb turkeys, or two for every man, woman, and child in the state!

As more states seek ways to improve their economic competitiveness and grow jobs and opportunity for their citizens, let’s make sure that they know what pro-growth tax relief means for them. It means more money for their kids’ education, for making healthier choices at the grocer, for lifesaving medication, or for a meal they otherwise would have left hungry. Lawmakers in both Mississippi and Florida did what too many in Washington continually fail to achieve – putting real goodness on the plates of every one of their citizens this holiday season. We hope that you and yours have a most lovely Christmas, and a bountiful New Year!