Another day, another tax cut proposal in Mississippi Legislature

by Geoff Pender, Mississippi Today
March 25, 2022

Speaker Philip Gunn and House leaders on Friday — the day before lawmakers' deadline to agree on broad strokes of a state budget — signed off on Gov. Tate Reeves' latest proposal to eliminate Mississippi's personal income tax.

“This makes six different proposals we have sent to the Senate to eliminate the income tax,” Gunn said Friday. “… We are collecting more money than we are spending from our citizens. We believe it's time to give money back to our citizens.”

Lt. Gov. Delbert Hosemann, who presides over the Senate, said, “I've lost count of their plans. At one time they were raising (sales) taxes by 2.5%. Then they were raising them 1.5%. Then they weren't raising taxes. Then we're doing $100 million a year. Now we're doing what the governor says … There is a reasonable way to go about this, cutting taxes … We don't want to come back to taxpayers in two or three years and say, ‘Oops.'”

The long-running tax cut fight between the Republican House and Senate leadership dominated a joint meeting Friday to ratify an estimate of how much money lawmakers have to spend. They have a Saturday night deadline to agree on a state budget for the new fiscal year that starts July 1.

Gunn since last year has pushed to eliminate, not just cut, the state personal income tax even if it takes years to phase it out. Hosemann and his Senate leadership propose cuts to income and other taxes this year, but say it's not prudent to eliminate one-third of the state's revenue and upend tax structure during uncertain economic times.

“We're in the Senate for eliminating all taxes,” Hosemann said. “… But I remember Jimmy Carter. I remember the '70s and '80s … 20% interest rates and recessions … We asked (the state economist) where we'll be in two years. He doesn't know. It's clear to me, with all due respect, that nobody but God knows … He also acknowledged there's a 35% chance of a recession. We need to get through the next three or four years and see where we are.

“… We have schools that need repair,” Hosemann said. “We have roads and bridges and water and sewer work that needs to be done.”

Gunn said the he and House leaders have tried to address all concerns about income tax elimination and sent over multiple proposals, last year and this year. He said the state economy is booming and government coffers are full, and he expects economic growth to continue.

“I'd like to bring up another number: zero,” Gunn said. “That's the number of reasons left why we can't do income tax elimination.”

READ MORE: Gov. Tate Reeves jumps into bitter Capitol income tax fight

Gunn said House leaders on Friday were sending yet another proposal — one proffered by Gov. Tate Reeves — to the Senate. It would cut the state's marginal personal income tax rate from 5% to 3.5% in the coming year, then phase out the tax over the next seven years.

Reeves vowed: “We are going to eliminate the income tax in Mississippi.”

On Thursday, after Reeves announced his tax elimination proposal, Gunn had responded: “Here we are two days before deadline and we see the first proposal from the governor. My question is, where are his votes? The Senate has been resistant to any proposal.”

But on Friday, Gunn said lead House tax negotiators were drafting a proposal containing the governor's plan, signing it and sending it to the Senate. On Wednesday, House leaders had signed and sent to the Senate a much scaled back proposal that would have eliminated the income tax over 18-20 years.

Hosemann, Gunn and the Joint Legislative Budget Committee met Friday, and after much debate and questioning the state economist whether the national and state economies are on shaky or solid ground, revised revenue estimates for the current state budget year ending in June and the coming one.

The committee raised the current fiscal year estimate from $5.9 billion to nearly $6.9 billion. For the coming budget year, the estimated was raised to $6.9 billion, up about $112 million from the previous estimate.

Gunn said next year's estimate was low-balled, and the state will take in much more money.

Hosemann said, “I would have felt more comfortable with a little bit lower.”

This article first appeared on Mississippi Today and is republished here under a Creative Commons license.