Potential policy changes seek to keep the best & brightest in Mississippi.
Language is being circulated amongst policy makers and economists in the Mississippi Capitol which seeks to establish an incentive to keep potential “knowledge economy” workers in Mississippi upon graduation from a Mississippi college or university. The “brain drain” bill would, in theory, give a 100% state income tax credit to individuals who graduate from a Mississippi school with a 4-year+ degree and then take a qualifying job in the state of Mississippi. While the language is far from finalized and economists research the best approach to the concept, high-end estimates seek to establish this tax credit for a period of up to five years.
We keep noting that the language is far from finalized. This is to say please do not take anything discussed in this article as a definite for what might be included in the final legislation. However, generally speaking, we would like to open the concept up for discussion with the following points:
• The recent graduate must take a qualifying job. It will be up to policy makers to determine what, exactly, is a “qualifying job.” However, in the spirit of what this potential bill hopes to accomplish, it would make sense that the job taken requires a 4-year+ degree. This would disqualify many low-paying service and retail jobs and focus on higher skilled categories.
• The income tax credit would make a difference in many of the fields in which we struggle to retain talent. An income tax credit from the state of Mississippi would result in the qualifying individual saving up to 5% of income. We’ve heard the argument that 5% won’t make much of an impact. True for many occupations which start in the low five-digits. Again, we would urge consideration of the spirit of the policy here – to build a highly compensated knowledge workforce. Coders, engineers, doctors, financial workers, etc. can earn in the high five digits or even low six digits right out of school. At this level, being able to offer 5% more take home pay guaranteed for five years does make a difference.
• The policy incentivizes a knowledge workforce but not at the burden of businesses. This is an effort to balance a favorable business operating climate with a favorable workforce climate. Though individual income tax credits, qualifying workers are able to take home more pay in their pockets without businesses being burdened with raising starting salaries. It is a win-win.
• The potential policy represents a supply-side solution to our knowledge workforce problem. Mississippi is one of only two Sunbelt states to have a net population loss over the past decade. A disproportionate amount of this outmigration are the highly educated – those who are instrumental in building a knowledge economy that can be competitive globally. Simply put, we are a net exporter of cognitive capital. We retain less individuals with 4-year+ degrees than we graduate. The argument that we often hear is that individual “have to leave” because of “lack of opportunity” here. This really presents us with a Catch-22 scenario, doesn’t it? If our best and brightest “have to leave,” how in the world can be expect to recruit knowledge-based business to the state… we won’t have the workforce. We believe that the supply-side approach can solve this issue. Businesses will go to areas in which they can operate the most efficiently. To reach this “efficiency” you must include factors such as cost of doing business, labor environment, workforce supply, amenities, and policy. Mississippi is good all these areas except for the knowledge workforce. So policy that will keep the knowledge workforce more populated will result in more knowledge industry here, both by organic growth, retention, and recruitment.
• The policy will result in a net gain for state and local revenue. A short-term and potentially very small impact to state coffers will likely be immediately offset by increased revenue at the local level. If we’re able to retain more highly compensated individuals chances are that within the five-year window these folks will buy a home, pay property taxes, pay more in sales taxes, and not be dependent on any type of public assistance. Also, once they are required to pay state income tax, the real dollars that represents is much larger than what much of our current workforce pays. This policy isn’t designed to raise revenue, but that can certainly be an unintended consequence.
The “brain drain” bill (maybe we should call it the “brain gain” bill) is a policy that we believe can draw bipartisan support. Representative Chuck Espy of Clarksdale has been instrumental in bringing the concept to other law makers at the Capitol. We believe that many legislators, regardless of their political party, will see the potential that this policy can make in regard to building a supporting infrastructure for the Mississippi’s Knowledge Economy.
We say again that at this stage the language is far from final and we’re discussing what is only potential legislative. Potential and exciting legislation. Please stay up with Fast Forward Mississippi for updates on this and other policies designed to curb our brain drain problem. You can follow Fast Forward on Twitter. Also, Rep. Espy and Tim Mask were recent guests on the Paul Gallo Show on the SuperTalk Mississippi network. To hear their discussion of this bill click here and “fast forward” the player to about the 1 hour 7 minute mark.