The highest tax rates in the country may be found in California or New York, but Mississippians have among the highest tax burdens in the Southeast, even outpacing national averages.
As a percentage of personal income, Mississippians have a state and local tax revenue rate of 10.57 percent. The national average is 10.08 and the Southeast average is 8.57.
Among neighboring states, Alabama has a rate of 8.23, Arkansas is 9.91, Louisiana is 9.22, and the income-tax free state of Tennessee is 7.76. This means Tennessee runs their government for about 25 percent cheaper than Mississippi. Mississippi is the only state in the Southeast, save for West Virginia, over 10 percent. The Mountaineer state is the highest in the region at 11.23.
Mississippi’s percentage has gone up steadily over the past few years. From 2010-2012, it ranged from 9.84 to 9.88. But this trend has, unfortunately, been going in the wrong direction over the past four decades. In 1977, the national average was 10.82 and Mississippi was at 9.82. The national average has decreased .7 percent, while Mississippi’s average has increased .8 percent.
Why does this matter? Because Americans are fleeing high tax states and moving to low tax states.
Twenty-six states had a tax burden of 8.5 percent or greater. Of those 26, 25 had a net out-migration. Only Maine was able to buck the trend. And not surprisingly, of the 17 states that had net migration gains in 2016, all but one has a tax burden of less than 8.5 percent. All totaled, more than 500,000 individuals moved from the top 25 highest-tax states to the 25 lowest-tax states in 2016.
Those high tax states, Mississippi among them, lost an aggregate income of $33 billion.
So what can we do in Mississippi? We can follow the lead of high-growth, low-tax states in the Southeast that have lower taxes, lighter licensure and regulatory burdens, and a smaller government.