Recently, while most Mississippians were busy working, raising families, and just trying to get by, the State of Mississippi held a little noticed hearing to consider imposing taxes on a significantly larger number of our citizens. This occurred after the Mississippi Legislature had already left town, leaving no opportunity for our elected officials to publicly debate this important issue at the state Capitol or cast votes on it. Rather, as has unfortunately become a fact of life in our day and age, unelected bureaucrats in a state government agency, with little fanfare and even less explanation, began a process to expand regulations that will require many Mississippians to pay more taxes with minimal public input and even less accountability.
A few months ago, the Mississippi Department of Revenue (“DOR”) filed a notice with the Secretary of State’s office, signaling that DOR would be amending several of its existing regulations. One of these revised regulations would expand the definition of hotels and motels to include rooms in people’s homes, as listed on popular internet websites like Airbnb or VRBO. Another proposed DOR regulation expanded the application of local tourism taxes.
These regulatory changes proposed by DOR come on the heels of another recent attempt by DOR earlier this year to require out-of-state companies to collect taxes on sales made to Mississippians over the internet, despite the fact that the U.S. Supreme Court has clearly stated this is illegal and DOR’s own Commissioner has admitted that what DOR is doing is “probably unconstitutional.”
State law requires DOR to timely notify the public of proposed rule changes. DOR did not do so. State law also requires DOR to issue a statement showing the impact of proposed rules on the economy. Again, DOR failed to do so. State agencies are required by law to prepare such Economic Impact Statements when adopting significant amendments to existing regulations. However, in the 11 years since such statements have been required, DOR has never issued one!
The most troubling aspect of all of these proposed regulations is that DOR’s actions represent a trampling of the doctrine of separation of powers in our form of government. This unelected bureaucracy is unconstitutionally commandeering authority from our legislative branch to make laws, rather than simply implementing them.
Regarding DOR’s proposed tax on people’s homes, bills were introduced in both houses of the Legislature during the 2017 legislative session to change the definition of hotel and motel under the local tourism tax to include short-term rentals of residential properties.
None of these bills became law.
Despite our elected representatives choosing not to change the law, this unelected state agency is now attempting to legislate by regulation. The same thing happened with internet taxation, as the Legislature considered and rejected changes to state law to allow DOR to tax out-of-state sellers like Amazon. Again, notwithstanding our elected officials opting not to enact such a law, DOR is proceeding with regulations to do it anyway.
This silent and gradual encroachment into our lives by an unelected and unaccountable Fourth Branch of government is deeply troubling for our form of government and the future of liberty. This governing by regulation is not what our Founders intended, not what was written into our Constitution, and not what our government was built upon. Our elected officials need to step up and put a stop to this regulatory tyranny. But we the people also need to let our voices be heard by getting more involved in the rulemaking process and challenging bad rules in court. The only way unaccountable agencies are going to change is if we make them do so.
Mike Hurst is the Director of the Mississippi Justice Institute. Learn more at msjustice.org online.