You know that the states in America’s growth corridors are focused on what they can do to help citizens raise their standard of living and prosper in business and retirement. Mississippi’s legislature has taken the next step in making their state a better place for constituents by sending a bill to Governor Tate Reeves that would lower the state’s income taxation rates. The Wall Street Journal’s editors write:
State legislative leaders agreed Saturday to an income-tax cut that will give Mississippi the nation’s fifth-lowest top rate (for states with an income tax). The plan would reduce the highest rate to 4% in stages from 5% by 2026, and eliminate a current 4% rate that applies to taxable income between $5,000 and $10,000. The state House and Senate passed the tax bill on Sunday, and it now awaits Gov. Tate Reeves’s signature.
The upside is clear. State revenues have soared since 2020, and several states have taken the chance to offer permanent taxpayer relief. “We have about $1.5 billion in excess revenue right now,” said House Speaker Philip Gunn last week, “and we’re on pace to have about $2.5 billion.” Mississippi trailed the nation with a median household income of $45,000 in 2020, and a low cost of living means even a modest tax cut goes a long way to help family budgets.
Mississippi Can Do More
The editors go on to push Mississippi to do even more. They write:
The rate cut will have immediate benefits, but the one percentage-point cut is far short of previous plans to end the income tax altogether. Mr. Gunn last week secured House backing for a proposal to slowly phase out the tax, and Gov. Reeves followed with a faster plan to nix it by 2030. The more modest cut that passed is a compromise to persuade a skeptical state Senate.
Republicans hold a majority of more than 2 to 1 in the upper chamber, but Senate leader (who is also Lt. Governor) Delbert Hosemann is hesitant to end the income tax. “I think there are other ways to spend the funds,” Mr. Hosemann said last month, addressing a previous version of the tax plan. Mr. Hosemann endorsed the final tax-cut deal, but he’ll still have plenty of money to spend as state revenue is expected to be $7 billion next fiscal year, some $500 million more than in fiscal 2022.
Mr. Gunn pledged to follow the current deal with additional cuts in future legislative sessions, and reforms in surrounding states provide a strong reason to do so. Louisiana amended its state constitution last year through a ballot measure that caps the income-tax rate at 4.75% and the top rate in 2022 will be 4.25%. Arkansas passed a cut last year that by 2025 will reduce the top rate to 4.9% from 5.9%. Tennessee and Florida have no income tax.
Mississippi’s tax cut is a worthy step forward. But competition is a powerful incentive, and the example of neighboring states should encourage greater progress in Jackson.
Action Line: States are constantly competing for your money, and residency. In fact, that is a feature, not a bug, in the American system. The more states compete to offer the best options for residents, the better they’ll get at servicing those residents. The states competing hardest for residents are the ones Your Survival Guy calls the Super States. Those states run by politicians who ignore residents and instead focus on their own political follies are the Escape States. If you are serious about making the move from an Escape State to a Super State, but can’t get going on your goal, I can help. Click here to subscribe to my free monthly Survive & Thrive letter, and I’ll help you break inertia and achieve your goal of freedom. But only if you’re serious.
E.J. Smith - Your Survival Guy
Latest posts by E.J. Smith - Your Survival Guy (see all)
- Survive and Thrive October 2022: Sink Your Teeth into These Bond Yields - October 1, 2022
- What You Start to See Is a Death Spiral - September 30, 2022
- Why Your State Doesn’t Need an Income Tax - September 30, 2022
- Biden, Harris, Obama and Democracy? - September 30, 2022
- Get Off the Investment Roller Coaster: Have a Plan - September 29, 2022