The Governor surprised a bunch of folks at last Monday’s press conference with his recommendation that state income tax be eliminated by 2030.
Part of his rhetoric for justification was that if Mississippi is going to prosper economically the state must do something drastic to get attention and doing away with personal income tax would be a great incentive to attracting business and a greater population to the state.
The recommendation comes on the implementation of the governor’s budget. There is only one problem--the governor is not the person responsible for setting the state’s budget. That is the role of the legislature. It is fine for him to make a recommendation, but that’s all it is--a recommendation.
Personal income tax funds about one-third of the state’s total income each year, $1.8 billion. Sales tax funds a little more at $2.2 billion. All other funding falls into a third category, which is about $1.73 billion according to District 77 Representative Price Wallace.
Governor Tate Reeves is not the only person who has discussed doing away with personal income tax in the state. Speaker of the House Mike Gunn has also brought this up in the past.
Some states like Tennessee do not have personal income tax, but their other taxes are much higher, such as property and sales taxes. Wallace said an increase on property tax is not a good way to raise funds for the government.
As a farmer he raises chickens and cattle. He said the tornadoes that swept through the state last year destroyed approximately 70 poultry operations. Now insurance costs have sky-rocketed, and only two companies are offering insurance for chicken farmers, Farm Bureau and Lloyds of London. Raising property taxes in this situation alone would put farmers and growers in a bind.
Wallace said he feels that a user tax is a better way to raise funds for the state. His theory is that a user tax like the one that has been suggested on gasoline products is the fairest way to tax, or the state could raise sales tax. Part of the justification is the fact that a large percentage of the state’s population are not property owners and therefore pay no taxes. He believes the equitable way to distribute the tax burden is through a user tax of some kind.
The problem as we see it with the Governor’s plan to do away with state income tax by 2030 is that no plans have been presented for making up the lost revenue. It may sound like a noble idea, but it has to be paid for, and until we hear ways to compensate for the lost revenue we would be hard pressed to support it.
But the real crux of the matter is that if the legislature is not on board with Reeves, it is nothing more than cheap talk.
Governor Reeves threw out another issue during his press conference-- that schools that are teaching virtually rather than through an in-person setting would not receive as much funding.
Here is Simpson County education professionals will tell you fast that hybrid learning and distance learning using virtual methods are not the best practices. The students need to return to the classroom following the proper protocols of social distancing and wearing masks. This county school system cannot afford to have funding cut if that becomes something the governor and the legislature decide to do.
The state cannot afford to have funding cut by an income tax loss now either. With everything that is going on with subsidies, additional unemployment benefits and the uncertainty of what tomorrow will bring, now is not the time to consider revamping the entire tax structure of the state, at least until we see what road we are headed down.