Mississippi Governor Tate Reeves addressed a crowd of businesspeople, lobbyists, legislators, and elected officials in Flowood, stating that eliminating the state income tax is crucial for unlocking the full economic potential of Mississippi. He encouraged legislators to disregard the opposition’s “myths” and support efforts to phase out the income tax. The Republican House Speaker, Jason White, organized a meeting to explore potential tax cuts that could be discussed during the upcoming legislative session starting in January.
Mississippi, historically one of the poorest states in the U.S., is already in the process of reducing its personal income tax following a law signed by Reeves in 2022. The state plans to decrease its top rate to 4% over the next two years. Governor Sarah Huckabee Sanders of Arkansas recently signed legislation to reduce her state’s income tax to 3.9%, prompting Reeves to advocate for Mississippi eventually eliminating its income tax to remain competitive with states like Florida, Tennessee, and Texas that do not impose an income tax.
During the previous budget year ending June 30, 2023, Mississippi derived nearly one-third of its general fund revenue from the individual income tax, making it the second-largest revenue source after the sales tax. Reeves emphasized debunking criticisms that cutting taxes would not stimulate job growth, hinder public education funding, or disrupt budget stability, citing job creation announcements and improvements in high school graduation rates and budget surpluses as evidence to the contrary.
White reiterated his support for phasing out the income tax and expressed a desire to halve the state’s 7% sales tax on groceries as swiftly as possible. However, some Republican senators, including Jeremy England and Finance Committee Chairman Josh Harkins, cautioned against hasty tax changes, citing obligations such as the Public Employees Retirement System and public buildings maintenance that must be funded. They highlighted the cautionary tale of Kansas, which rolled back substantial tax cuts in 2017 after experiencing revenue shortfalls.
House Ways and Means Committee Chairman Trey Lamar proposed a bold approach of enacting a “transformational” income tax phase-out to make a significant impact. Lamar emphasized that the taxpayers of Mississippi deserve to benefit from such initiatives, asserting that it is time for the state to make substantial strides in tax reform.
