Mr. Jackson, Miss — Mississippi Governor Tate Reeves has pledged to completely eliminate the state’s income tax in the 2023 Congress. The move will make Mississippi her 10th state to have no income tax.
Addressing a large group of business leaders at an event hosted by the state Chamber of Commerce on Thursday, Reeves hailed “the largest tax cut in Mississippi history during the 2022 session” and said he wanted to go further. .
“In the last session, the fiscal and monetary environment was just right for doing just that, but unfortunately the political environment was not,” Reeves said.
Mississippi’s Republican-controlled legislature passed a bill in 2022 that would eliminate the state’s 4% income tax cap from 2023. Over the next three years, the 5% quota will be reduced to his 4%.
Nine states have no income tax, and another (New Hampshire) taxes only interest and dividends, according to the National Congress of States. Washington State has passed a capital gains tax for high-income earners facing legal troubles in 2021.
Proponents of the 2022 Mississippi tax cut said it would boost economic growth and attract new residents to Mississippi. Opponents said lowering income taxes would mean less money for schools, health care, roads and other services, hurting poor, working-class residents of Mississippi in particular.
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Mississippi’s income tax accounts for 34% of state revenue. Lawmakers said the tax cuts would reduce state revenue by $185 million in the first year. By the final year, this figure will be her $525 million.
Reeves said tax incentives have given way to labor concerns in deciding where companies are located. “The key is whether you can hire enough people to bring your product to market,” he said.
While Mississippi’s population has declined over the past decade, the rest of the Sun Belt is attracting new residents. The tax cut proposal is a direct effort to compete with states like Texas, Florida and Tennessee that don’t tax income.
“You don’t have to be a geography expert to look at a map and realize that you have Texas to the west, Florida to the east, and Tennessee to the north,” Reeves said. “All three states have no income tax, so all three states have a competitive advantage when it comes to hiring both businesses and individuals.”
Democratic Senator Hobb Bryan said the idea of people choosing where to live based on taxation was “seemingly laughable.”
“Need I say it again? That face is funny,” Brian told the Associated Press on Thursday.
“The bill that passed last year was the most disastrous piece of legislation that I have passed in the 40 years I spent[in Congress],” Brian said. “Mississippi desperately needs water, sewers and roads. .”
Many business people have not taken a strong stance on eliminating the income tax in Mississippi. In his 2022 report detailing the concerns of business leaders in the state, the Mississippi Economic Council said, “Mississippi’s tax environment has received little attention and has been heavily debated as a priority. Neither was there,” he wrote.
Bryan said a major factor preventing capital from flowing into Mississippi is “hospitals across the state that are in danger of closing.”
“People don’t move anywhere without healthcare,” Brian said.
The 2023 Congress begins in January.
Michael Goldberg is a member of the Associated Press/Reports for America Statehouse News Initiative. Report for America is a non-profit national service program that places journalists in local newsrooms to cover hidden issues. Follow him on his Twitter at twitter.com/mikergoldberg.
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