If its governor has his way, Mississippi may become the 10th state to eliminate state income tax.
Key Details
- Governor Tate Reeves says the state will attempt to eliminate income taxes during the next session, AP reports.
- He spoke Thursday to address business leaders at the state’s Chamber of Commerce.
- “Last session the fiscal and the financial environment was right to do exactly that, but unfortunately, the political environment was not. This session I hope that’s not the case,” says Reeves
- State income tax makes up 34% of its income and could initially lose $185 million for just the first year. Supporters say that reduced income would be made up by making the state more attractive for businesses and movers.
- Mississippi’s legislature already passed tax reductions in 2022.
- The 2023 legislative session begins in January.
Why it’s Important
The law may make Mississippi an attractive destination for interstate commerce and new residents, as no-income-tax states like Texas, Tennessee, and Florida have become popular hotspots for relocation. Texas alone added nearly 4 million new residents in the past decade.
“Mississippi’s population has dwindled in the past decade, even as other Sun Belt states are bustling with new residents. Tax-cut proposals are a direct effort to compete with states that don’t tax earnings, including Texas, Florida, and Tennessee,” says AP.
The Problem
The law faces opposition though. Neither Republican Lt. Gov. Delbert Hosemann nor Republican House Speaker Philip Gunn has committed to pursuing it yet and the law has strong opponents who oppose the negative effects of lower tax revenue for the state.
“Opponents said reducing the income tax would mean less money for schools, health care, roads, and other services, especially hurting Mississippi’s poor and working-class residents,” says AP.
Democratic state Senator Hob Bryan says the previous tax cut was “the most disastrous piece of legislation in 40 years”—and that the “state of Mississippi desperately needs water, sewer, and roads. We cannot give away one-third of the state’s revenue and have enough money to provide basic services.”
Surprising statistics
Nine states currently do not have state income taxes—Wyoming, Washington, Texas, Tennessee, South Dakota, Nevada, Florida, and Alaska. Additionally, “New Hampshire only taxes interest and dividends,” according to AP. Washington state also passed capital gains taxes in 2021.
