Mississippi House and Senate pass different versions of tax reform
MEMPHIS, Tenn. (WMC) - The Mississippi House of Representatives and Senate have both passed their proposals for tax reform in their respective chamber. The Senate’s passed Wednesday by a vote of 40-11.
SB-3164 calls for a lowering of the state’s grocery taxes, one of the highest in the country at 7%, to 5%.
Mississippi tax filers would receive a 5% tax rebate under this bill.
The minimum a filer would receive is $100 added to their tax returns with a rebate cap at $1,000, but to reach that cap, a filer would have to make, minimum, $200,000 in annual income.
The bill also eliminates the 4% tax bracket.
“It would eliminate the 4% bracket on $5,000 of income over a four-year period,” clarified Russ Latino with Empower Mississippi. “Basically, it would phase that in, and eventually every Mississippian that has at least $5,000 of taxable income will get a $200 tax saving.”
Latino, the Empower Mississippi president, has been watching both proposals closely,\ and feels more encouraged than other years that a tax reform of some kind is in the state’s future.
“Between the [House and Senate], the House tax plan is a much, much larger net tax cut for Mississippians,” Latino said.
That’s because the House’s Tax Freedom Act (HB-531), which was passed in mid-January 107-4, calls for the elimination of the state income tax, which is something Governor Tate Reeves has been a strong proponent for.
The bill, like the Senate’s proposal, would lower the state grocery tax to 5.5%.
It would also reduce the overall price of car tags by 50%.
To help pay for this, the House calls for a raise of the state sales tax from 7% to 8.5%
Authors of the Senate’s tax reform proposal feel their bill would be covered in the state’s current fiscal numbers.
“The total recurring revenue loss is about $316 million,” said Senator Josh Harkins on the Senate Floor Wednesday, describing SB-3164 to his colleagues. “The rebate brings the package up to about $446 million. This plan does not raise sales tax. It does not raise any excise tax.”
Despite the state facing a slowly decreasing population and stagnant economy, according to Latino, Mississippi finds itself in a rare position to make these sweeping cuts and promote economic prosperity.
“For now, two years running, we’re operating with a $1 billion surplus. That’s an awful lot of the peoples’ money sitting on the sidelines, stockpiled if you will,” Latino said. “If you look at Tennessee, or Texas, or Florida, tax burden is way lower as a percentage of their overall economy than Mississippi’s, but their growth and revenue far exceeds Mississippi’s.”
It’s unclear how much back-and-forth will occur between the two bodies.
Latino compares the situation to Goldilocks and the Three Bears.
One bowl of porridge (proposal) is too hot, one too cold, and it’s the legislators’ job to find the one that’s just right.
“There seems to be a desire to do something, creating relief and creating a better, fairer tax structure,” Latino said. “We’ve got this rare moment to be able to take advantage of the surpluses, return dollars to the private sector, and let people invest in their families, their communities, and their businesses.”
The House and Senate must put a single bill on Reeves’ desk by March 28.
Even if nothing is done before the general assembly adjourns, Latino said he would be surprised if Reeves called a special session to further discuss tax reform in the state.
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