Eliminate state income taxes for most taxpayers in 2023 and phase it out totally within about a decade
Increase the sales tax on most retail items from 7% to 8.5%, an increase of 20%.
Cut the grocery tax eventually from 7% to 4%
Cut car tags in half, by using state tax dollars to subsidize local government car tag fees.
Senate Bill 3164 would:
Phase-out the 4% state income tax bracket over four years. This would mean people would pay no state income tax on their first $26,600 of income, a savings of about $50 a year.
Reduce the state grocery tax from 7% to 5%, starting in July.
Provide up to a 5%, one-time income tax rebate in 2022 for those who paid taxes. The rebates would range from $100 to $1,000.
Eliminate the state fee on car tags going into the general fund, which would be about $5 off the cost of a new tag, $3.75 for renewals.
House Bill (HB) 531 would increase the sales tax that all Mississippians pay on most items by 20% raising the rate from 7% to 8.5%. The House plan would eliminate state income taxes for most taxpayers in 2023 and phase it out totally in future years. The state income tax accounts for 1/3 of general fund revenue at present. If you are at least 59 years old, half Mississippi does not impose income tax on your retirement income. This includes distributions from 401ks, IRAs, pensions, deferred compensation plans, and Social Security and applies to all Mississippi retirees (in both the private and public sectors). Because your retirement income is already exempt from state income tax, retirees living on a fixed income from these sources will receive no benefit from the elimination of the state income tax while paying 20% more sales tax on most items under HB 531.
The Senate has also filed a tax cut bill: SB 3164. Overall the Senate plan has a number of elements that could benefit PERS members and other retirees but does include a phase-out of the 4% state income tax bracket and up to a 5% one- time tax rebate in 2022 only for those who paid income taxes. Further erosion of the state income tax revenues is not in the best interest of PERS members. Tax rebates which can be implemented periodically based on available revenues represent a more prudent approach to managing the state’s finances. However, these rebates should be made to all Mississippians who filed a tax return, not just those who paid income tax. This would benefit all retirees including PERS members who pay substantial amounts in sales, local and other taxes each year.
Recommended Action
Oppose HB 531. Request amendment of SB 3164 by eliminating the proposed phase-out of the 4% income tax bracket and making the tax rebate in 2022 available to all Mississippians filing a tax return, not just those who paid income tax. Contact Speaker of the House, Phillip Gunn, Ways and Means Chairman, Trey Lamar, Lieutenant Governor, Delbert Hosemann, Senate Finance Chairman, Josh Harkins, and your local Representative and Senator at the Capitol Switchboard (601) 359-2220.
What the State Economist’s Office says
The State Economist’s Office has studied the House tax cut plan and determined that by 2032 it would result in a loss of population and a reduction in employment and personal income in Mississippi. By 2035 there would be a reduction in state gross domestic product. These findings have negative implications for current and future PERS retirees and for the state as a whole.
What state business leaders say
“The Mississippi tax environment was not high profile nor even discussed significantly as a priority,” said a report released by the Mississippi Economic Council at the state Capitol on Wednesday, based on dozens of meetings and hundreds of surveys of business leaders across the state last year.” “A businessman raised the topic (at one meeting) and dismissed it as a bad idea (a distraction issue, but not really a hindrance to most businesses).” State business leaders consider the lack of skilled workers, Mississippi’s image, and problems from the pandemic far more pressing issues.
