MS Legislature to Consider Income and Sales Tax Changes

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Mississippi is one of 13 states that impose a sales tax on groceries.

If Governor Tate Reeves and President Philip Gunn are successful, Mississippi will remain among the minority of states taxing groceries, but become the 10th state not to tax earned income.

Reeves proposed that in addition to dealing with the COVID-19 pandemic in the next session, the legislature also pass a bill to phase out state income tax. Gunn said he supported the effort.

“We’ve been trying to find ways to develop a stronger and fairer tax structure,” Gunn said recently.

Many think the Mississippi’s 7% tax on groceries, bread, milk and baby food is about as unfair as a tax can be.

None other than the late Alan Nunnelee, as respected in conservative circles as any Mississippi politician in recent years, has said so much during his tenure in the Mississippi Senate where he championed the reduction or elimination of the tax on food.

Nunnelee, who died in 2015 while serving in the United States House, told the New York Times in 2007 that the sales tax on groceries “is just the cruelest tax a government can impose “.

The argument, of course, is that it’s much more of a tax burden for a poor person to buy that gallon of milk, a loaf of bread, or infant formula than for a rich person. But the rich and the poor are going to buy essentially the same gallon of milk or bread.

Reeves and Gunn believe that eliminating the income tax will stimulate economic development and, apparently, is also a “fairer” endeavor to undertake.

Regarding the elimination of income tax, Reeves said: “Right now the world economy is chaotic. We are fortunate to attract investment and good paying jobs. We need to produce more products here and increase our population. We must take bold steps to capitalize on the opportunities for growth. This bold move is phasing out income tax.

Mississippi first adopted a sales tax during the Great Depression, when the meager existing income tax was not producing enough revenue to fund utilities.

Michael Leachman, vice president of state tax policy for the Center for Budget and Policy Priorities, points out that former Mississippi Governor Mike Conner, who proposed the sales tax increase, said: “There are thousands of people in Mississippi today who do not pay taxes. , but who enjoy all the rights and privileges of citizenship. These people will be happy to have the opportunity to share the responsibility of maintaining the government of the state in which they live.

Sales tax has been argued for a long time to be fair because people who do not own property to tax or have no income to tax will still have to pay sales tax when they buy goods. the food.

Leachman argues that Mississippi, which he says adopted the first modern sales tax, did so at least in part for racial reasons. Even though Mississippi politicians have a huge racial advantage that history tells us they might not deserve, it’s fair to assume that a high percentage of people Connor referred to as ne paying no tax were African Americans. After all, due to the higher levels of poverty among black residents, they then had and now have less property and income to tax.

Most of the states where the highest sales taxes can be found are in the South. And only three states levy as much sales tax on food as it does on other retail items. Two of them are also southern states – Mississippi and Alabama – the other being South Dakota.

In the 2000s, the Mississippi Legislature, led by then-Republican Lieutenant Governor Amy Tuck and other Republicans, such as Nunnelee, voted to phase out the food sales tax. But then-Gov. Haley Barbour, who shared Gunn and Reeves’ views that it would be economically beneficial and fairer to reduce income tax, vetoed the legislation.

Barbour never had the opportunity to reduce income tax during his tenure, largely because of the economic and financial conditions facing the state.

Some wonder if Mississippi in 2021 can afford to phase out the income tax, which accounts for about a third of the state’s general fund revenue, at a time when there are so many other needs.

Another question might be: what is fairer for Mississippi to cut – income tax or food tax? The answer to this question depends on who you think should be paying taxes.

This analysis was carried out by Mississippi today, a non-profit news organization that covers state government, public policy, politics and culture. Bobby Harrison is the senior reporter for Capitol Hill Mississippi Today.

This story was originally published 14 December 2020 00h00.


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