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May 25, 2024

Reeves pitches Mississippi income tax reform proposal with time running out

A new income tax elimination plan has been proposed by the governor as the Mississippi Legislature remains deadlocked on the issue.

Republican Gov. Tate Reeves offered a proposal early Thursday that would eliminate the state’s income tax over the next eight years. There are three days remaining in the legislative session and the House and Senate, each led respectively by the GOP, remain deadlocked on the issue.

The proposal would impose a flat tax rate of 3.5% during the first year to reduce the tax rate on all income, according to Empower Mississippi, a public policy group focused on state issues.

Currently, the state’s income tax structure does not tax the first $5,000 of income, but earnings between $5,000 and $10,000 are taxed at a 4% rate. Earnings above $10,000 are assessed at a 5% tax rate.

Reeves’ plan to cut the tax rate to 3.5% would save taxpayers $500 million in 2023, according to the release. The House plan would immediately raise tax exemptions to $37,700 for single filers and $75,400 for joint filers. The Senate plan would only eliminate the income tax right away for those earning between $5,000 and $10,000 and then walk down the income tax rate from 4% to 0% over the next four years.

The governor’s proposal, according to the release, would have Mississippi become the 10th state to operate without an income tax, and would achieve that by reducing the tax rate by a half-percentage point per year until it reaches zero.

Reeves touted the plan on his Facebook page urging taxpayers to “think back to President Trump’s time” and “every objection to eliminating” the state’s income tax “was thrown at Republicans” who the governor said were trying to pass Trump Tax Cuts.

“Liberals fundamentally want to spend,” Reeves said. “Conservatives want to cut taxes.”

Reeves said the Legislature spent $5.8 billion to operate the government this year and said the elected body “will agree they have $7 billion for next year,” which he said is “$1.2 billion more than this year.”

The governor said he believes there is time to get an income tax elimination plan done before the session expires.

“The Legislature should pass an income tax bill that immediately cuts the top marginal rate from 5% to 3.5%,” Reeves said in the post. “That would be $600 million. Less than half of our surplus. That lets them spend $600 million of your money on whatever they like!”

Reeves said he is also calling on the Legislature to reduce the marginal rate by an additional half-percent over seven years to eliminate the income tax.

“Anything less in year one is too little and any phase-in longer than that is too late,” Reeves said.

Russ Latino, president of Empower Mississippi, said the state has a great opportunity to “advance transformational tax reform.”

“The governor’s plan boldly seizes upon this moment in time,” Latino said in the release. “For two years we’ve debated and scrutinized the idea of eliminating the income tax. The proof is in the pudding, with states without income taxes dramatically outperforming the nation in economic and population growth. For two years, we’ve watched as revenue to government climbed while it became more expensive for Mississippi families to buy groceries.

“The path forward is clear and urgent. Now is the time.”

This article was originally posted on Reeves pitches Mississippi income tax reform proposal with time running out

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