Bill to get rid of the state income tax passes House
On Saturday, Feb. 27, the Mississippi House of Representatives passed a bill to get rid of state income tax. The bill will now go the state Senate and should it pass there, it will go to Gov. Tate Reeves to sign into law.
Currently, there are nine states that do not have an income tax, and Mississippi’s neighboring state of Tennessee is one of those nine. Florida and Texas are also two Southern states who have seen huge success in not having an income tax.
Speaker Philip Gunn gave some insight in how the bill came about in the state legislature.
“We started this process about four to five years ago when we had a series of hearings during the summertime, and one [facet of government] that I particularly wanted to focus on was our tax structure,” Speaker Gunn said. “I’ve always felt like Mississippi could have a better tax structure, so we brought in some experts from Washington D.C., primarily the Tax Foundation
that just talked about basic tax policy. During that discussion, it surfaced that you want to move away from taxes on productivity and move toward consumption taxes as much as you can. Each state is different, each state has its own challenges and some states can do that better than others. But, to the extent that you can, you would love to have your tax structure be based upon consumption – that would be sales taxes, use taxes, a gasoline tax is an example of a use tax. She mentioned that taxes on income is a tax on productivity – the more you make, the more you pay.”
The bill passed in the House with an 85-34 vote, and it has been dubbed as the Tax Freedom Bill. This bill, should it become law, would make the first $47,700 a single person makes tax exempt and this would rise to $95,400 for married couples.
Income tax would not be cut out immediately but rather phased out over time, and it would increase the state sales tax rate from seven percent to nine and a half percent. While regular sales taxes will increase, the bill also includes cutting the grocery
tax from seven percent to three and a half percent.
According to Speaker Gunn, income tax currently brings in about $1.7 billion, but making a higher sales tax would make for a more fair tax system as well as put more control in the hands of Mississippians.
“The beauty of it [higher sales tax instead of having an income tax] is it puts the control of the tax in the hands of the taxpayer,” Speaker Gunn said. “The taxpayer can decide what taxes he or she wants to pay. If they don’t want to pay the tax on an item, they don’t have to buy it. Under an income tax, the government tells you how much you got to pay.”