Economic incentive or accelerating crumbling infrastructure: Mississippi mulls future of state income tax
Published 8:56 pm Wednesday, August 25, 2021
Some members of the Republican-controlled Mississippi Legislature are renewing an effort to eliminate the state income tax — a proposal that failed earlier this year amid concerns it would drain budgets for schools, roads and other services in one of the nation’s poorest states.
Republican House Speaker Philip Gunn is leading the effort, and he said Wednesday that phasing out the state income tax could help Mississippi attract new businesses and new residents.
“I don’t think if we just eliminate the income tax that it’s going to be ‘happy days are here again,’ but we fight enough obstacles in this state to attract people already. That’s one of them,” Gunn told reporters at the Capitol.
Democratic Sen. Hob Bryan of Amory, opposes erasing the income tax. He said Mississippi has “crumbling” roads, widespread water and sewer problems and areas that lack reliable internet access.
“Do you know a single human being on the face of the earth that would move to Mississippi if only we didn’t have a state income tax?” Bryan said. “It’s laughable on its face.”
Their comments came after several members of the House and Senate spent hours listening to the state revenue commissioner, the state economist and others. The hearing extends into a second day Thursday.
Jared Walczak, vice president of state projects for the Washington-based Tax Foundation, told legislators Wednesday that nine states do not charge an income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.
Walczak said states without an income tax have experienced faster growth than many other states, especially those with higher rates.
Individual income taxes made up 34% of Mississippi’s state tax revenue during the state budget year that ended June 30, according to the state Department of Revenue. That was about $2.2 billion from individual income taxes in the nearly $6.6 billion the state collected for its general fund.
Any votes on trying to eliminate the income tax could be months away because the full Legislature is not meeting now. The next regularly scheduled legislative session begins in January.
Republican Gov. Tate Reeves said Tuesday that he supports eliminating the income tax.