The Mississippi legislature is currently reviewing a proposal to remove the state income tax. At the same time, the state’s finances are in good shape, with a healthy emergency fund and high revenues. Meanwhile, many Mississippians are struggling from the pandemic economy, feeling the impacts of inflation, and watching the federal government continue to increase taxes and spending.

A common objection to repealing the state income tax is that the state government’s revenue and budget could be damaged. While such an argument might work seemingly well in a federal context with bloated budgets, Mississippi’s government has a fairly responsible budget that is the fruit of conservative spending policies.

To start, a key indicator state’s fiscal health is the status of it rainy day fund. In Mississippi, the state’s rainy day fund has seen exceptional growth over the last several years. In 2013, the state had $86 million in the rainy-day fund. In 2021, the rainy-day fund had $558 million. That is an increase of 640 percent in just eight years. The current funds are enough to run the entire state government for 36 days.  

In addition, the state is seeing higher than expected revenue collections, which are an additional indicator of financial stability. In October 2021, the Legislative Budget Office reported a 16.42 percent increase above the general fund estimates for this fiscal year.

This brings in a key question. One of the key purposes of true fiscal responsibility is so that the people will have less burdens from excessive government debt, taxes, and spending. Yet, what use is it for the people if the government follows a responsible budget and keeps the same tax burden on the people? Sure, such policies will certainly fill the state coffers, but they leave the state’s people with less income and less freedom.

Shifting the focus from state government to the actual citizens of Mississippi, it is important to note the present need for financial relief through a smaller tax burden. Thus, while the state of Mississippi has surplus revenues that are continually growing, a recent study from Forbes found that 40 percent of individual Americans with emergency savings prior to March 2020 dipped into those savings during Covid. Seventy-three percent of those individuals used more than half of their emergency fund. Americans are in a time of financial challenge -and having to pay federal and state income taxes isn’t helping them either.

Combined with all of these state-level fiscal factors is the recent financial influence of the federal government on the state budget and individual Mississippians. The state government has received millions of dollars in federal funding to its great financial benefit. Meanwhile, citizens have had to deal with the direct effects of federal spending and inflation on their wallets and shopping carts. The state should address this discrepancy by creating a tax environment with no state income tax that adds to the burdens coming from Washington.

Looking to 2022, the state government will have a large degree of leverage as it can use federal funding for long-term projects that require large amounts of funds, such as roads and bridges. Even if all of the federal funds were only utilized for special, long-term projects and the funds played no role in the routine operations of state government, these federal funds could remove some fiscal pressure from state revenues. This removes even more pressure from the state’s own revenue funding and provides flexibility for the income tax repeal.

In light of these facts, it has become clear that now is the time to repeal the state income tax. A truly conservative government will lower taxes whenever it can responsibly do so, and it is now or never for Mississippi. If state leaders cannot execute a plan to eliminate the state income tax in 2022, a better time may never come. With state government funds in a stable position, and the citizens recovering from financial challenges, it’s time for Mississippi to “Axe the Tax.”