Here’s what economists, experts say about eliminating Mississippi’s income tax

by Luke Ramseth – MS Business Journal

Would the Legislature’s income tax elimination proposal help or hurt Mississippi’s economy? How about the average Mississippi taxpayer?

It depends on who you ask – and which economic report you decide to read.

At least five reports have been released in recent days that specifically examine the legislation proposed by Republican House leaders, or a tax cut similar to it.

Here’s what each of those economic reviews found – but first, a quick overview of the plan itself.

What would House Bill 1439 do?

House Bill 1439 raced through the chamber on Feb. 23, winning approval on an 85-34 vote only a day after it was unveiled.

Authored by House Speaker Philip Gunn and two other top Republicans, the bill is now under consideration in the Senate, where it’s expected to face considerably more opposition. The Senate leader, Lt. Gov. Delbert Hosemann, says he is highly skeptical of the legislation.

The proposal would phase out the state income tax within about a decade and cut the state’s 7% tax on groceries in half. To make up for those losses in revenue, it would increase the sales tax on most items from 7% to 9.5%.

Taxes would also go up on several other items, including farm and manufacturing equipment, alcohol, and tobacco – all in an effort to balance out the huge revenue loss of eliminating the income tax.

The legislation would gradually exempt a larger share of income from being taxed each year. In 2022 up to $50,000 would be tax-free, and that number would increase to cover the state’s highest earners within a decade.

However, the phaseout would be paused if the state doesn’t meet specific revenue goals. That means a 10-year goal of eliminating the income tax could ultimately take several years longer.

Here’s what experts say about the House proposal, or similar Mississippi proposals to eliminate income taxes:

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