JACKSON, Miss. (Washington Insider Magazine) – Mississippi lawmakers passed the state’s largest-ever tax cut on Sunday, according to ABC NEWS. Mississippi is among the poorest states in the country, with poorly funded schools and failing rural hospitals.
The Republican-controlled state Senate and House passed a legislation that will lower the state income tax over 4 years, effective 2023, by huge margins. Governor Tate Reeves, a Republican, will sign the legislation. He has stated that he intends to pass it into law.
Supporters argue that a large tax reduction will boost economic growth and bring new inhabitants to Mississippi, which is one of 3 states that has lost population in the decade leading up to the 2020 Census.
Opponents argue that lowering the income tax will result in less funding for roads, health care, schools, and other services, which will disproportionately affect Mississippi’s poor as well as working-class population.
Senator David Jordan, a Greenwood Democrat, expressed worry that if the state decreases taxes, legislators would not be able to pay for promised government services.
Mississippi’s income tax generates 34% of the state’s income. The wealthy would benefit the most financially from removing the income tax as they already pay the most. Because the poorest citizens currently earn too little to pay state income tax, they would receive no benefit.
The 4% income tax level will be phased out beginning next year. The 5 percent rate would be decreased to 4% over the next 3 years.
According to parliamentarians, the tax-free income thresholds after the initial year will be $18,300 for a single individual and $36,600 for a married couple.
The tax decrease, according to Senate Finance Chair Of the committee Josh Harkins, a Republican from Flowood, will cost the state $185 million in the first year. The total would be $525 million at the end of the year. The budget’s state-funded share is over $7 billion.
Because of increased government funding during the COVID-19 pandemic, Mississippi has had strong tax receipts in recent months. However, the state faces costly fiscal problems, such as a long-running court battle requiring mental health system reforms. Legislators have seldom placed all of the funds into a school financing system in place since the 1990s. After uprisings during late 2019 and early 2020 brought attention to abysmal jail conditions, the state’s correctional system was investigated by the federal government.
According to the National Conference of State Legislatures, 9 states have no income tax and another, New Hampshire, exclusively taxes dividends and interest. Opponents of lowering Mississippi’s income tax compare the state to Republican-led Kansas, which adopted major tax cuts in 2012 and 2013, but restored much of them in 2017 due to massive and recurring budget deficits.
A single individual without dependents pays no tax on their first $12,300 of earnings in Mississippi under current legislation. The tax-free level will grow to $13,300 following this year as a result of tax cuts passed years ago. The state levies a 4% tax on the following $5,000 in earnings and a 5% tax on any earnings above that.
