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Mississippi doesn’t have the worst tax system for attracting financial investment in the nation; nor does it have the best.
However, there are signs that recent legislative moves will boost the state’s tax system rankings, at least by one measure.
A new report from the Washington, D.C.-based Tax Foundation, which monitors government tax policies, shows that Mississippi’s tax system is No. 28 among the states.
Here’s how Mississippi’s tax system breaks down, according to the report:
- Overall tax climate: 28
- Corporate tax structure: 12
- Individual income tax structure: 20
- Sales tax structure: 38
- Property tax structure: 35
- Unemployment insurance tax structure: 5
Wyoming has the top, or most competitive, tax system. Louisiana has one of the 10 worst environments, with a ranking of No. 41. Arkansas ranks 38th; Alabama 32nd. Tennessee comes in at No. 13.
“In 2016, Mississippi adopted a gradual phase-out of its capital stock tax, which will begin in 2018 and fully repeal the tax by 2028. The state will also begin phasing in a reduction in its corporate and individual income tax rates starting in 2018. These changes will be reflected in subsequent editions of the Index,” authors of the report wrote.
The capital stock tax, known as the franchise tax, is assessed for the privilege of doing business in the state of Mississippi.
This year, lawmakers voted to repeal that tax. Beginning in 2018, the first $100,000 of taxable capital will be exempt from the franchise tax. In 2019, the tax cut reduces the rate by 25 cents every year until the franchise tax is fully repealed as of Jan. 1, 2028.
Legislators also voted for the elimination of the 3-percent tax bracket by 2022, starting in calendar year 2018. Getting rid of the 3-percent bracket will ultimately save individual taxpayers $150 every year.
Pennsylvania voted to eliminate its franchise tax in 2014, which helped cause a jump in that state’s Tax Foundation ranking from 28th to 24th.
Lt. Gov. Tate Reeves, who championed the tax cuts, said he’s encouraged by the report.
“For employers, taxes are simply a cost of doing business that is factored into their end product or service,” he said through a statement. “A fairer, flatter tax policy helps make Mississippi companies more competitive globally by eliminating or reducing that additional cost. Eventually, I want to see Mississippi move into the top 15 of the foundation’s report and this confirms our recent action will help move us in that direction.”