According to the 2020 census, Mississippi experienced an overall population decrease from 2010 to 2020. As state leaders attempt to determine the cause and implement policies to encourage people to move to Mississippi, repealing the income tax could be a good place to start.
The Mississippi legislature is currently holding hearings on an initiative to repeal the income tax. As the legislature considers the potential implications of an income tax repeal in Mississippi, it is vital to consider the implications of tax policy on population growth.
Mississippi ranks lower than many of its neighbors when it comes to the total tax burden. Meanwhile, other states in the Southeast have better rankings. It is important to note that of the top 5 states that Mississippi has lost population to in the last couple of decades, all of them have a lower tax burden than Mississippi.
These competing states include Texas, Georgia, Alabama, Florida, and North Carolina. Texas and Florida have no income tax at all, while North Carolina has a flat tax on income. Georgia and Alabama both have an income tax, yet both of these states have a sales tax of only 4 percent. Meanwhile, Mississippi currently has both the second-highest sales tax rate in the nation (7 percent) and a graduated-rate state income tax.
Repealing the income tax provides a foundation for the citizens of other states to consider moving to Mississippi. Economic growth in Mississippi is dependent on its people. There are several keys ways that repealing the income tax would directly encourage people to move to Mississippi.
According to the 2021 edition of the “Rich States, Poor States” report, published annually by the American Legislative Exchange Council, states with low or no income taxes saw greater economic growth. A review of the data reveals that tax burdens are a direct factor in the economic growth of states.
Repealing the income tax is a proven component of economic growth that has worked in other states. For example, in the wake of Florida’s repeal of the income tax several years ago, the state has seen growth in its workforce and immigration levels, particularly for high-earners. Similarly, the state of South Dakota has seen incredible growth as a result of economically friendly policies, including its lack of a state income tax.
People follow the opportunity that economic growth generates by moving to states with successful job growth. In fact, a study found that approximately 52 percent of all relocations are for economic reasons. Mississippi should notate these facts and encourage people to move to the state by creating an environment that leaves more money in its citizens’ pockets.
If Mississippi wants to get competitive with other states and see an increase in its population instead of a decrease, repealing the income tax is an important place to start. While other factors play into people moving to Mississippi, the bare minimum that state leaders can do is enact policies that leave money in the people’s pockets. It’s time to axe the tax.