MS governor wants to eliminate personal income tax
Mississippi residents would get a big financial boost if they only had a dollar for every time Governor Tate Reeves advocated the elimination of personal income tax so that the State can compete with Texas, Florida and Tennessee.
âWe compete with them every day for new jobs, and in any case we’re at a disadvantage because they don’t have income tax and we do,â Reeves said recently.
Reeves wants to eliminate Mississippi personal income tax within five years.
There are a multitude of ways to compare Mississippi to these three tax-free southern states and perhaps the nation as a whole. And it’s no secret that Mississippi lags behind these three states and the country as a whole when it comes to salaries, health care scores, and other factors. For example, Mississippi is last in terms of per capita income and average household income. Florida, Texas and Tennessee do not make the top 10 in these categories.
Major states in terms of per capita income, such as California, Massachusetts, Connecticut, New Jersey, and New York, have a significant income tax.
Surprisingly, Mississippi surpasses many of those states, the nation and – gulp – these three tax-free states in terms of personal income growth, adjusted for inflation, for the 2020 calendar year.
In 2020, the country’s personal income grew 5.28%, while Mississippi’s grew an even healthier 6.16%. On the other hand, Florida’s personal income increased by 4.89% while that of Texas increased by 3.58% and Tennessee by 3.77%.
Of the nine states without income tax, only two – Washington and South Dakota – increased their personal income faster than Mississippi and the United States.
Granted, 2020 has been an anomaly in many ways thanks to the COVID-19 pandemic and the massive influx of federal funds that fueled growth, especially in a poor state like Mississippi where those funds have had an impact. most important. A study by Pew, a national nonprofit foundation that provides research on public policy issues, shows that for many years dating back to 2007, Mississippi’s personal income growth has been quite anemic – dismal for many these years. And yes, Texas, which has been a booming economic engine for many years, has seen much stronger personal income growth, according to the Pew study. But the same goes for other states that have an income tax, a much higher income tax than Mississippi, like California, New York, and others.
Many methods of measuring economic vitality exist, but growing personal income seems to be a reasonable way to do it.
According to Sara Leiseca of Pew, âPersonal income is about residents’ paychecks, social security benefits, employer contributions to pensions and health insurance, income from rent and other property, and the benefits of public assistance programs such as Medicare and Medicaid, among other elements. Personal income excludes realized or unrealized capital gains, such as those from stock market investments.
Despite these strong personal income growth figures that Mississippi enjoyed in 2020, it is true, as Reeves points out, that Tennessee, Texas, and Florida overtake Mississippi in most areas.
But the bottom line is that Mississippi is at a disadvantage in many areas, not just tax policy, when it competes with those states. Mississippi lacks the tourist and major city options of Florida. Mississippi also lacks Nashville, becoming one of the country’s major cities, like Tennessee. And Texas has several cities larger than our largest city, Jackson, and some of those liberal-leaning cities like Austin have options for high-paying tech jobs.
Where Mississippi competes directly with Tennessee and wins every day is in DeSoto County, a suburb of Memphis.
For decades, DeSoto County has been one of the fastest growing counties in Mississippi, mainly because of people leaving Shelby County in Tennessee, where there is no income tax. income, to cross the state border to live and pay that income tax that Reeves therefore despises.
According to the 2020 census, Shelby County has grown 0.2% over the past 10 years. Across the Mississippi state border, where people have to pay income taxes, DeSoto County has grown almost 15%.
People have chosen to live in DeSoto County and pay income tax instead of crossing the border into the state of Tennessee where there is no income tax.
And in terms of economic development, DeSoto County is also winning against Tennessee – at least according to none other than Governor Reeves.
âDeSoto County and Mississippi can compete with the best of the bestâ¦ and win,â the governor said recently on social media.
Maybe the Mississippians could also get a dollar for every time the governor says that.
This analysis was carried out by Mississippi today, a non-profit news organization that covers state government, public policy, politics and culture. Bobby Harrison is the senior reporter for Capitol Hill Mississippi Today.