Mississippi, one of the poorest states in the United States, where schools are underfunded and rural hospitals are struggling, passed the biggest tax cut in its history on Sunday.
The House of Representatives and the Senate, both under Republican control, overwhelmingly approved a bill that would reduce the state income tax for four years, beginning in 2023. The proposal will be sent to Republican Governor Tate Reeves, who has indicated that he will enact it.
“This affects every Mississippian who gets up to go to work,” Senate Finance Committee Chairman Josh Harkins, a Flowood Republican, said Sunday.
Supporters of the measure say a significant tax cut could spur economic growth and attract new residents to Mississippi, which was one of three states that lost population in the decade before the 2020 Census.
“This tax cut will make Mississippi one of the most job-friendly states in the nation,” said House Speaker Philip Gunn.
Opponents say the income tax cut would mean less revenue for schools, health care, roads and other services, hitting poor and working-class residents of Mississippi especially hard.
Sen. David Jordan, D-Greenwood, said he worries lawmakers won’t be able to pay for planned government services if the state cuts taxes.
Mississippi income tax is 34% of state income.
People with higher incomes would be the most benefited by the elimination of income tax, since they are the ones who pay the most now. The poorest residents would see no benefit because they already earn too little to pay state income tax.
Starting next year, the 4% income tax rate would be completely eliminated. The following three years, the percentage of 5% would be reduced to 4%.
Lawmakers noted that after the first year, the tax-free income levels would be $18,300 for a single person and $36,600 for a married couple.
Harkins explained that the tax cut would cut the state’s revenue by $185 million in the first year. For the last year, the figure would be 525 million dollars. The part of the budget financed by the state is almost 7,000 million dollars.