Mississippi Moves Forward with Tax Reform
by Brett Kittredge, Empower Mississippi
This week, Mississippi Gov. Tate Reeves signed the largest tax cut in state history into law.
Over the next four years, Mississippi will create the largest tax exemption in the country, become one of ten states to operate with a simple and fair flat tax, and lower its tax rate to 4%, the fifth-lowest rate in the nation.
What does this mean for workers? It means that a single worker will not owe any taxes on the first $18,300 of earnings. For married workers, that number is $36,600. It means a 20% reduction in taxes on all remaining income. A working family near the household median in income will save over $800 a year.
It’s more than that, however. A year after Louisiana adopted significant tax reform, lowering its top income tax rate to 4.25%, Mississippi will soon have a lower income tax rate than our neighbors.
But each state competes with the other 49 states, not just their neighboring states. They compete for the business, industry, and talent that provides the tax revenue that feeds every area of government. And we know – based on the latest Census data – individuals and families are moving to low and no-tax states in large numbers, creating more economic growth for those states. My home state of Mississippi has been on the wrong side of migration data. Louisiana has as well in recent years.
States realize this. In addition to Louisiana, last year we saw a dozen states take action on tax reform. That trend hasn’t slowed down this year. The bottom line is, that if you are not actively working to reduce your taxes as a state, you are becoming less competitive each day simply by doing nothing.
At the signing ceremony on Tuesday, Reeves and other state leaders made it clear that this wasn’t the conclusion of their work on tax reform. This was simply the next step in a process that began five years ago when the state eliminated the first income tax bracket and multiple anti-competitive business taxes. The next goal is income tax elimination.