Critics say it could eliminate vital services
Despite several attempts to rework income tax legislation, the Mississippi House of Representatives and Senate remain conflicted on the future of income tax in the state.
Governor Tate Reeves continues to support the elimination of the state income tax, saying it will lead to job and population growth for Mississippi. Mississippi has received nearly two billion dollars from the federal government for coronavirus and infrastructure relief, and Reeves says he believes this deal can get done without calling a special session.
“I’m optimistic that we’re going to get a plan passed to ultimately eliminate the income tax, and I’m optimistic that we’re going to pass a spending plan for those American Rescue Plan dollars,” he said.
The House has sent the Senate a new version of their plan, making concessions on several key items. Their original plan was to increase the state sales tax but that is no longer included in the proposal. The Senate plan would immediately reduce the grocery tax from 7% to 5%, and suspend the 18-cent per gallon gas tax for six months. It also calls for the elimination of the 4% tax bracket over 5-8 years but does not eliminate state income taxes.
Reeves said the state’s higher than expected revenue collections over the past two years are proof Mississippi can afford to do away with the state income tax.
“Our economy is on fire right now. We are seeing significant capital being invested in all regions of our state. We are seeing significant number of jobs available in all regions of our state,” he said. “In fact, we are at the point where we can say we used to have a lot of people out looking for jobs. Right now, we have a lot of jobs out looking for people.”
Representative DeKeither Stamps says he didn’t support the latest version of the bill because they were not being given a chance to read it. He says his constituents are mixed on the issue.
“There is a mix of folks, primarily senior citizens, they don’t have any personal income to eliminate,” he said. “We’ve got to the point where the bill doesn’t raise sales tax so it’s a step in the right direction.”
Stamps says he doesn’t believe in cutting taxes until we see how it’s going to affect working class people. If you cut taxes, he says, you’ll have vital services that could be cut.
“We’ve got mental health that’s underfunded right now. We’ve got home health agencies being underfunded. Who’s going to provide all these services if you’re cutting taxes?” Stamps continues, “You can’t articulate these cuts you’ve made to these particular agencies with no public hearings. Let these people come before us and let them say what the effects will be.”
Currently, nine states don’t charge income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
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 percentage amounts to about $2.2 billion from individual income taxes in the nearly $6.6 billion the state collected for its general fund.
In a statement to the Jackson Advocate, One Voice Executive Director Nsombi Lambright says eliminating state income tax would harm working families, particularly families of color.
“Lawmakers contend that this bill creates a more equitable tax system. But it still provides a major benefit for the state’s wealthiest, primarily white taxpayers,” Lambright expressed. “A tax shift from the state’s wealthiest income earners to the state’s lower and middle income earners only contributes to existing wealth, race, and gender inequities in the state.”