Studying Mississippi’s tax structure is a good idea as long as lawmakers don’t have a preconceived idea of what the end product should look like.
It’s clear that House Speaker Philip Gunn does. He got his chamber several months back to hurriedly pass a 317-page overhaul of the state’s tax code that undoubtedly few House members read. It was a complicated proposal that included phasing out the individual income tax and cutting the sales tax on groceries, but raising the sales tax on most everything else, including eliminating or reducing about 20 preferential sales-tax rates that the state had enacted over the decades.
The general thrust of the proposal was to shift the way state government gets its money from a collection mechanism that is balanced between income and consumption to one that is heavily weighted toward consumption.
Thankfully, the Senate, under the leadership of the more deliberative Delbert Hosemann, said not so fast and killed the House bill but vowed to study the state’s tax structure over the summer and consider proposing changes for lawmakers to consider during the 2022 legislative session.
Those hearings will be held in about two weeks before a joint committee appointed by Gunn and Hosemann.
If that committee keeps an open mind, it will come to a few conclusions.
First, Mississippi has anything but an onerous income tax, and this was true even before Republican lawmakers enacted a reduction a few years back. A report earlier this year by the state economists showed Mississippians rank in about the bottom fourth in the nation for how much of their income is eaten away by state income taxes. Other reports have shown that while you can find some states with no individual income tax that have grown much faster than Mississippi, there’s no proof that the growth and tax rates are unequivocally connected. Several higher-taxed states have also grown much faster than Mississippi.
Second, shifting the tax burden further toward consumption hurts the people who can least afford it. Since the poor and the near-poor spend a greater percentage of their income on taxable items than do the wealthy, they are disproportionately affected by sales tax increases.
Third, eliminating tax breaks is easier said than done. Among the groups that didn’t like Gunn’s proposal were farmers, automobile dealers and manufacturers, all constituencies with political clout. If the state is not going to help pay for eliminating the income tax by reducing or eliminating these tax breaks and others like them, that means even more has to be put on the backs of those without much leverage at the Capitol: the less well-to-do.
If Mississippi were looking at a more equitable tax structure, it would be trying to do just the opposite of what Gunn proposed. It would shift more of the load toward income and less toward consumption.
We wouldn’t expect a heavily Republican study committee to go that far. But maybe it can be convinced that wherever the tax burden is raised, it should be on those individuals and companies that can best afford to pay more.
- The Greenwood Commonwealth
