Under the Mississippi Tax Freedom Act, approved by the House of Representatives by a massive majority, no one earning less than $40,000 a year would pay any state income tax at all.
The House plan is prudent, too. In order to ensure that we can afford to scrap state income tax, the plan commits to further eliminate the income tax as other sources of tax revenue grow. There is nothing rash or risky about this approach. What the House plan would do is make our state competitive. At the moment we are surrounded by states that do not have any state income tax – states like Tennessee, Texas and Florida.
In order to be able to grow our state, we need this plan to pass. That is why it is so disappointing to see the Senate offer an alternative plan which would not eliminate the income tax at all.
The Senate plan proposes eliminating the 4% income tax rate. Sounds great, no?
In reality, so few pay much tax at that rate anyhow, it would mean that the average Mississippi worker was only about $200 a year better off. That would not be enough to by a Subway sandwich each week.
The Senate plan cannot credibly be called a tax elimination plan. I am not certain that it does much to reduce the amount of tax people pay at all.
The Senate plan implies a significant reduction in the amount of tax we pay when we get a new car tag. But this is disingenuous. Since most of the car tag tax is local, the state reduction that the Senate implies would mean a reduction in your car tag tax of no more than $5.
The House plan is the only plan under consideration that would give back to Mississippi taxpayers much of the billion dollar surplus in the state budget. The Senate plan, however, leaves politicians free to spend that money instead. Perhaps that is the intention?
Taking into account all of the changes proposed, including changes to the sales tax rate, the House plan would leave almost every Mississippian, under pretty much every scenario, better off. It is difficult to see how anyone would be made significantly better off under the Senate plan. I fear that the tax plan that the Senate has proposed risks undermining the credibility of those calling for tax breaks altogether. We are all familiar with politicians who run campaigns against “the swamp” but then disappear to DC to enjoy lunch with lobbyists. How do you imagine voters would react when they discover that the car tag tax reduction they are being sold as part of the Senate plan will only reduce their car tag by $5?
We are at a critical moment in the future of our state, and I hope that our lawmakers will do the right thing and seize this chance to make our state properly competitive. Unless our lawmakers find a way of coming together behind a plan that actually lifts the tax burden, our state will continue to lag behind.