One of the most challenging aspects of taxes is finding the balance between limiting taxation to ensure it does not choke out economic innovation and growth while taxing enough to keep the government functioning well. Despite having less expenses, many rural county governments in the state have higher property taxes than urban counties.

It is a balance many governments fail to meet, which is why many tax policies are often miswritten. Property taxes comprise most of Mississippi’s revenue in each of its 82 counties.  In fact, over a quarter of the Mississippi government’s revenue comes from property taxes.  This source of revenue is used for a variety of different purposes; however, a third of municipal governments and public schools’ budgets rely on property tax collections. 

Mississippi exercises a system of five classifications of taxable items when pursuing property taxes.  There is a different assessment ratio in each of these classifications, ranging from 10 to 30 percent of the total value: Class I consists of single-family, owner-occupied residential property, and its assessment ratio is 10 percent. Class II consists of any property that is not Class I property nor property used for public service assessed by the state or county and is assessed at 15 percent. Class III property entails personal property except for motor vehicles and public service property assessed by the state or county.  It is assessed at 15 percent. Class IV property is any public service property assessed by the state or county except railroad and airline property, and it is assessed at 30 percent. Finally, Class V consists of motor vehicle property, and it is assessed at 30 percent.

Despite the specific parameters for the state-mandated rates, there is a large degree of arbitrary inconsistencies on the county-level, which is where the actual taxes are levied. In order to get a grasp on these specifics, MCPP conducted an analysis of average property tax rates per county divided by the per capita income, population, and average property values.

The analysis revealed that many of the poorest counties with the lowest property values have the highest per capita property tax burdens. In addition, many of the counties with the lowest incomes and the lowest populations have even higher taxes than urban counties with higher property values, larger populations, and more government services to pay for.

This reveals that many counties are placing their citizens at a higher risk of tax forfeiture while also driving down incomes. Not only does this affect individuals simply seeking to keep their property, but it is also a distinctive for investment and growth. If property taxes are high, this can also lead many to sell their property and live elsewhere. At the end of the day, county governments ought to tax their people fairly. Local tax rates that arbitrarily tax the property that their people already own without due consideration of actual population and actual government budgets should drastically reformed. If county governments truly want to treat their citizens fairly and encourage growth, property tax overhauls could be a crucial step.