Mississippi income tax cut proposal dies in Senate with no vote

Published 6:00 pm Tuesday, March 16, 2021

(AP) — A proposal to make significant changes to Mississippi’s tax structure died Tuesday in the state Senate, despite Republican Gov. Tate Reeves pushing legislators to phase out the state’s personal income tax.

Tuesday was the deadline for the Senate to keep House Bill 1439 alive. Senate Finance Committee Chairman Josh Harkins, a Republican from Flowood, said he was letting the bill die without bringing it up for a vote.

Harkins said legislators need more time to evaluate the potential impact of decreasing some tax rates and increasing others. He said the House and Senate could hold hearings this summer.

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“I just want to make sure whatever we do is responsible,” Harkins said Tuesday.

The bill proposed phasing out Mississippi’s income tax and cutting the 7% state grocery tax in half. It also proposed increasing the sales tax on most items from 7% to 9.5% and increasing taxes on other items, including tobacco, alcohol, farm implements and manufacturing equipment.

Republican House Speaker Philip Gunn and his allies introduced the bill Feb. 22, and it moved through the House Ways and Means Committee that day. It passed the GOP-controlled House the next day on an 85-34 vote that was largely along party lines, with only a few Democrats supporting it and only one Republican opposing it.

Gunn said Tuesday that he’s disappointed senators killed the bill.

“The elimination of income tax is good for Mississippi,” Gunn said. “It puts more disposable income into pockets and therefore it helps our economy, it helps (people) provide for their families, and we ought to be looking for ways to make it happen.”

A federal coronavirus relief package signed by President Joe Biden last week prohibits states from using federal relief money to pay for tax cuts. But the Mississippi tax cut plan originated weeks before the federal legislation was signed, and Harkins said the federal package did not affect his decision to kill the state plan.

Republican Sen. Chris McDaniel of Ellisville said Tuesday that he wanted to try to amend the House bill to remove any tax increases. He wanted to eliminate the 4% income tax bracket in 2022 and then phase out the 5% income tax bracket over 10 years. He said the 5% bracket would phase out only if the state economy grows and that would enable state government to pay for essential services.

“It’s a no-brainer, and now’s the time to do it,” McDaniel said Tuesday.

Mississippi tax collections for the first eight months of the current budget year — July through February — were higher than for the same period a year earlier.

Gunn and other supporters of the bill say it could help Mississippi compete with states that already don’t have a personal income tax, including Texas and Florida.

Public policy groups have lined up for and against Mississippi tax cut proposals. Empower Mississippi is among the conservative groups that have said phasing out the income tax would reward productivity. The left-leaning Center on Budget and Policy Priorities has said four of the five states that made deep cuts to personal income taxes in the first half of the 2010s later lagged behind national averages in job growth and personal income.