Elimination of state income tax could be a good thing
Published 9:56 am Sunday, January 19, 2025
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The debate over tax cuts and tax increases is well under way in the Mississippi Legislature, thanks to the House of Representatives.
House members this week passed a $1.1 billion income tax elimination plan that also includes increases in gas and sales taxes. The measure passed with bipartisan support and is headed to the Senate for review.
The bill would eventually cut about $1.1 billion from the state’s general fund, which is about $7 billion. Supporters said economic growth would offset any that loss and not result in major cuts to government services or spending.
Opponents cry foul, saying the bill simply shifts the burden from income tax to a more regressive form by increasing taxes on groceries and gasoline.
Key points of the plan include:
• Reducing state income tax from 4% to 3% next year, then tapering it down to 0% over the next 10 years.
• Adding a 1.5% sales tax for local governments, increasing the state’s net sales tax from 7% to 8.5%. This is in addition to any local sales taxes in place.
• Lowering taxes on unprepared food from 7% to 2.5% over the next decade – ending with a net 4% grocery tax once the state sales tax increase is in place.
So is this proposal really good for Mississippians?
Again, it may depend on your perspective – and your tax bracket.
Rep. Robert Johnson III of Natchez, the House Minority Leader, was quick to point out that the measure doesn’t do enough to safeguard that the state government will have funds it needs to operate existing programs. Moreover, he said, the sales tax increase shifts the burden to poorer Mississippians.
“This is putting a burden on working people,” Johnson told Mississippi Today.
But the elimination of a state income tax could be a good thing. Nine states – including Texas, Tennessee, and Florida – have already eliminated state income tax and found other ways to fund government services while giving residents a much-appreciated financial break. Solid fiscal management and accountability would go a long way toward ensuring the general fund obligations are met and the state’s economy continues to grow.
Hopefully, lawmakers can invest the time and serious effort into considering this measure this year instead of kicking the can down the road. It could be a move forward for Mississippi and an important benefit for Mississippi residents.