Lawmakers plan to hold two days of hearings on eliminating or cutting Mississippi’s individual income tax on Aug. 25 and 26.
The hearings will be before a joint select committee of eight senators and eight House members, selected by the lieutenant governor and speaker, Senate Finance Chairman Josh Harkins said on Tuesday. Harkins said the hearings will likely include testimony from state and national tax experts, agency leaders and business people, but its itinerary hasn’t been finalized.
The hearings are in response to House Speaker Philip Gunn’s push to eliminate the state’s individual income tax, cut taxes on groceries in half and increase sales and other taxes to make up the lost revenue. The House in this year’s legislative session passed Gunn’s plan, but the Senate killed it without a vote, saying the plan needed more vetting and vowing to study it over the summer and fall.
Recently, Lt. Gov. Delbert Hosemann said, “The Senate will hold hearings … on comprehensive tax reform, and we have invited the House to join us.” While he has stopped short of agreeing that individual income taxes can be eliminated, Hosemann has said recently he expects at least a cut in income taxes, with state revenues coming in at a record click recently.
Gunn’s plan has raised concern from numerous interests. Advocates for poor and moderate income Mississippians and retirees fear it would shift more of the state’s tax burden on them. Big business interests such as manufacturers and some small business groups fear the sales tax increases in the plan would increase their “input” costs drastically down their supply chains.
Some lawmakers on both sides of the aisle fear the major change in tax structure — individual income taxes generate about $1.8 billion a year, or 32% of the state’s revenue — would tank the state budget.
Gov. Tate Reeves has said he supports eliminating the income tax, but wants to do it with no commensurate increase in other taxes.
While Gunn has had trouble getting business and interest groups to sign on with his plan, he said last week that it has been warmly received by many people as he’s traveled the state talking with civic and business groups in recent months. Gunn said the nine states with no income tax, including Florida, Tennessee and Texas, are economically thriving and attracting more people, unlike Mississippi, one of just three states to lose population over the last decade.
No state has ever phased out an individual income tax. Alaska, the only state to eliminate an existing income tax, did so in one fell swoop.
Harkins agreed with Hosemann’s assessment that at least an income tax cut is in the offing next year. But he said eliminating income taxes or a major overhaul of tax structure will take much deliberation and study.
“You’ve got one chance to do this right, and I want to make sure that we are really looking for everything, dotting our Is and crossing our Ts,” Harkins said. “There’s a reason no other state has done this, because it’s hard to do it, but I know other states are in the process of trying … My goal with these hearings is to provide a lot of information — how the money comes i n, from what sources, how much, what are some of the diversions and tax credit exemptions … What are the pitfalls? Proceeding with caution is how I would describe this.
Hosemann also recently said, “All of the hearings will be webcasted because we want you to be a part of the process. It is your money.”