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House seeks college graduate tax breaks, but could be costly

February 7, 2019

JACKSON, Miss. (AP) — Mississippi could become the latest state to begin offering incentives to recent college graduates who remain in or move to the state, as lawmakers seek to stem the state’s falling population.

The state House on Tuesday voted 111-2 to pass House Bill 816, which would pay back half or all of a recent graduate’s state income tax payments after five years of residence.

“The purpose of this is to let Mississippi recruit the best and brightest,” said state Rep. Trey Lamar, a Republican from Senatobia and sponsor of the bill.

Lamar said he doesn’t have an estimate of how much such a program would cost, but said he thought it would be nominal. However, Associated Press calculations suggest it could cost more than $20 million a year if widely adopted.

The plan would rebate half of a graduate’s state income tax payments after five years to any college or professional school graduate who signed up for the program. It would give all the income tax back to anyone who bought a house or other real estate or who started a state-registered business that employs at least one other person.

Mississippi has long repaid student loans for some teachers and medical professionals in exchange for them remaining in the state, a common tactic in many states. But business leaders and others say they’re worried about the state’s ability to hold onto good people, amid an economy that has grown much more slowly than the nation’s as a whole.

Other rural states with population challenges are considering or have adopted similar proposals. Vermont, for example, is offering to pay up to $10,000 over two years for those who move to the state and work remotely for an out-of-state company. Maine offers income tax credits for some college graduates, and even some cash payouts. New Hampshire and Michigan spend money marketing their states to graduates.

“More and more groups and lawmakers are concerned about brain drain, college graduates leaving the state after graduation,” said Tom Harnisch, director of state relations and policy analysis for the American Association of State Colleges and Universities.

Mississippi’s plan could be expensive, though. More than 11,000 students graduated from public universities in the state last year, and previous students have shown just more than half are working in the state five years later. If all those people earned a $40,000 annual salary over that time, each would be eligible for a check worth almost $3,600 at the end of five years. Those who bought property or started companies would eligible for a rebate of almost $7,200. If everyone participated at just the lower bracket, that would be almost $20 million a year in rebates.

Tim Mask, president of Jackson advertising agency Marist, West & Baker, has been a proponent of measures to combat brain drain. He said his company needs a growing state economy to thrive. He said the prospect of a large cash check after five years might help influence someone deciding on a career path.

“I don’t think there’s one silver bullet, but I do think that it’s one thing policy can address,” Mask said.

Others express doubts, the plan can overcome Mississippi’s rural nature, low incomes and slow growth.

“They’re not leaving the state because of our tax code,” said Democratic Rep. Jarvis Dortch of Raymond. “They’re leaving the state because they don’t perceive any opportunities.”

Harnisch said that in addition to incentives, Mississippi policy makers should be thinking about whether there are good jobs for graduates and also about the quality of life enjoyed by Mississippi residents.

“This needs to be part of a broader conversation about a growth plan for the state,” he said.

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Follow Jeff Amy at http://twitter.com/jeffamy .

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