From EMILY WAGSTER PETTUS Associated Press March 27, 2022, 11:37 p.m. • 4 minutes reading Share to Facebook Share to Twitter Email this article JACKSON, Miss. Mississippi, one of the nation’s poorest states with ever-underfunded schools and dilapidated rural hospitals, has passed the biggest tax cut ever. The Republican-controlled state House and Senate voted overwhelmingly in favor of a bill that would reduce the state income tax for four years, starting in 2023. The bill goes to Republican Gov. Tate Reeves. He has stated that he will sign it to become law. “It affects every Mississippi who gets up and goes to work,” Senate Finance Committee Chairman Josh Harkins, a Floyd Republican, said Sunday. Proponents say a significant tax cut could boost economic growth and attract new residents to Mississippi, one of three states that lost population in the decade leading up to the 2020 Census. “This tax cut will make Mississippi one of the nation’s most work-friendly states,” said Republican House Speaker Philip Gann. Opponents say lowering income tax would mean less money for schools, health care, roads and other services, especially hurting Mississippi’s poor and hardworking residents. Sen. David Jordan, a Democrat from Greenwood, said he was concerned that lawmakers would not be able to pay for the expected government services if the state cuts taxes. “I do not want everyone to be hanged in a dummy,” Jordan said. Mississippi income tax accounts for 34% of government revenue. Wealthy people would see the biggest financial boost from the abolition of income tax, because they are the ones who pay the most now. The poorest residents would see no benefit because they already earn very little to pay state income tax. From next year, the 4% income tax scale will be abolished. Over the next three years, the 5% limit will be reduced to 4%. After the first year, tax-free income levels will be $ 18,300 for a single person and $ 36,600 for a married couple, lawmakers said. Harkins said the tax cuts would cut government revenue by $ 185 million in the first year. By last year, the figure would have been $ 525 million. The state-funded part of the budget is almost $ 7 billion. Mississippi has been enjoying strong tax revenue for the past several months, in part due to increased federal spending during the COVID-19 pandemic. But the state also faces costly budget elements, including a lengthy court case that requires improvements in the mental health system. Lawmakers have rarely put all the money they need into a school funding formula that has been legislated since the late 1990s. The state correction system came under federal scrutiny after riots in late 2019 and early 2020 focused on attention to poor living conditions in prisons. Nine states have no income tax and another, New Hampshire, taxes only interest and dividends, according to the National Conference of State Legislatures. Opponents of the Mississippi income tax cut point to the Republican-led Kansas, which introduced major tax cuts in 2012 and 2013, but scrapped many of them in 2017 after major and persistent budget deficits. Under current law, a person without dependents in Mississippi does not currently pay tax on their first $ 12,300 in income. Due to tax cuts approved years ago, the tax-free amount will increase to $ 13,300 after this year. The state has a 4% tax on the next $ 5,000 in income and a 5% tax on all income above that. ——— Follow Emily Wagster Pettus on Twitter:
