Wyatt Emmerich, Southside Sun
The Picayune Item
Over the holidays, I visited my sister Melanie and her family in Austin, Texas. Austin provides an interesting contrast to Jackson.
Austin is the fastest growing big city in the country, growing at a rate of 20 percent over the last decade. The unemployment rate is below five percent.
Dallas, Houston and San Antonio are all experiencing strong growth, despite the overall weak national economy.
One factor could be the lack of personal and corporate taxes in Texas. Mississippi’s individual and corporate tax rate is five percent.
Many Mississippians would gladly pay an extra five percent for the privilege to live and work in our beautiful state, but this may be a harder sell to outsiders.
Maybe that’s why we give big tax breaks to newcomers while sticking it to our existing businesses. Maybe Mississippi is so wonderful that once you get here and experience it, you will never leave. The key is to just lure them here in the first place. Or maybe not.
Studies have shown the states with the greatest long-term growth are those that have broad-based incentives for all businesses — like no corporate tax. Texas is a perfect example.
If Mississippi really wants to get serious about job growth, we need to imitate the successful strategy of Texas and eliminate personal and corporate taxes.
Benjamin Franklin reputedly said there is nothing certain in life but death and taxes. Even Texas can’t buck that truism. Texas has the third highest property taxes in the country at 1.81 percent of home value. In comparison, Mississippi has the eighth lowest property tax at 0.52 percent.
Which begs the question: Which is the better way to raise revenue — income tax or property tax? If you look at the Texas experience, Mississippi should consider raising property taxes and eliminating the income tax. This would be a huge boost for jobs.
The job growth and population boom in Austin has caused real estate prices there to soar. Nationwide, home values have dropped 30 percent since the peak in 2006. Not in Austin. Values are up, which causes property taxes to rise.
My sister’s house in Austin is smaller than my house in Jackson. But her house is worth nearly three times as much and her property taxes are four times as high. Her extra property tax is greater than what I pay in state income taxes. Not to mention the extra insurance required and — of course — a much higher mortgage payment.
This reminds me of an unresolved issue in comparing the relative affluence of American states. None of the stats factor in the extra mortgage costs of living in more affluent states.
We all have heard that Mississippi has the lowest household income in the United States. Mississippi’s median household income is $36,646. In comparison, California’s is $58,931. That’s a difference of $22,285.
But the average cost of a home in California is $566,537 and the average cost of a home in Mississippi is $197,409. That’s a difference of $369,128.
An extra $369,128 on a five percent, 30-year mortgage would cost $30,000 — that’s $7,715 more than the difference in household income between the two states.
Factoring in housing costs, Mississippians have more discretionary income than Californians.
During the real estate boom prior to 2006, Californians could borrow against their homes to make up for their huge mortgage notes. We know what happened to that party.
Quite frankly, the size and quality of a typical Mississippi home are equal to the ones in my sister’s hip Austin neighborhood where prices were four times as high.
So when people talk about how poor Mississippi is tell them this: If you factor in our low cost of housing, Mississippians have more to spend than many of the rich states.
After a few days in Austin, we moved to my sister’s country home in the town of Roundtop, Texas, population 90. Tiny as Roundtop is, it boasts a half-dozen art galleries, antique stores and cool restaurants. That’s because Roundtop is half-way between the Austin and Houston boom towns. They have owned the place for 20 years and done very well on the appreciation.
My brother-in-law Steve and I walked the grounds as he grumbled about the terrible drought. Many of his big, treasured post oak trees have died. The cedars and cedar elms have fared better. Those are the three species that really thrive in this area.
Steve’s love of his 18 acres of land made me again appreciate Mississippi, where our population density if probably a fifth that of east Texas. If there’s one thing Mississippians have plenty of it’s land.