Officials in more than a dozen counties in Mississippi are dealing with a harsh reality that tends to escape too many lawmakers, past and present. When you give one group a tax break, some other group has to pay for it.
Last week, supervisors in one such county, Pike, learned that they had lost a years-long legal battle with owners of two low-income housing complexes and will have to repay more than $400,000 in taxes collected on the Section 42 apartments. The payback, as difficult as it is, pales in comparison to lost tax revenue in the years to come.
The outcome of the case, involving housing complexes on which the owners received federal tax credits to construct, should have come as no surprise. Most of the other counties in a similar dispute have already found out it was a losing battle.
In 2013, the Mississippi Supreme Court, in a Humphreys County case, upheld a law passed by the Legislature in 2005 spelling out the tax breaks on the Section 42 housing. The legislation restricted assessments on Section 42 housing to the capitalized value of the property’s actual net operating income, not the construction cost of the developments. The federal tax credits the owners received couldn’t be factored into the equation.
Faye Hodges, president of the Pike County Board of Supervisors, said, “It’s a shifting of the tax burden, and I think wrongfully so, for the people who should be paying the taxes.”
Board Attorney Wayne Dowdy said that “the Mississippi Constitution has been ignored in this,” citing a passage that says taxation should be uniform and equal throughout the state.
The fact is, though, the Legislature has repeatedly given tax exemptions of different sorts to various businesses and industries, including even shopping centers that directly compete with other retailers that don’t get the tax breaks. Some individual property owners, like the elderly, pay less property taxes than younger homeowners.
Whatever property tax uniformity the state constitution requires has been skirted for generations.
Valid arguments can be made for some of the discrepancies, but there are too many of them. And if history repeats, as it probably will, there will be more.
