Mississippi’s business tax climate can do better

By Aaron Rice
October 2, 2018

Mississippi’s business tax climate rating dropped slightly over the past year.

The Tax Foundation’sState Business Tax Climate Index” grades each state on the burden of their corporate taxes, individual income taxes, sales taxes, property taxes, and unemployment insurance taxes. Fewer policy areas are as important as tax policy when it comes to economic growth.

The five highest rated states were Wyoming, Alaska, South Dakota, Florida, and Montana, while the five worst states in terms of business tax climate were New Jersey, California, New York, Connecticut, and Arkansas.

Mississippi’s ranking isn’t that much different from where it has been the past four years, ranging from a high of 29 (in 2016 and last year) to a low of 31 (this year). In 2017, the state ranked 30th. Still, Mississippi did drop slightly from the previous year.

This change, however, isn’t due to negative action taken by the state but simply because other states had passed Mississippi. One of those was Kentucky, the biggest gainer nationwide. They moved up 16 spots from 39th to 23rd after a series of tax reforms in the Bluegrass State.

Compared to our neighbors, Tennessee is doing the best by far. The income-tax-free state was rated 16th. Mississippi, however, bested our three other border states: Alabama (39), Louisiana (44), and Arkansas (46). That is good, but not anything to necessarily celebrate as it says more about their poor-performance.

Looking within the different tax categories, Mississippi did best with respect to unemployment insurance taxes (5) and corporate taxes (15). In fact, the corporate taxes topped all neighboring states, including Tennessee. However, Mississippi’s rankings for individual taxes (27), sales taxes (35), and property taxes (36) held the state back.

Generally speaking, the states with the best business tax climate are also the states that having a growing economy and a growing population.


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