/Mississippi lawmakers reach deal to cut, but not eliminate income tax

Mississippi lawmakers reach deal to cut, but not eliminate income tax

Although the plan doesn’t eliminate personal income tax, Gunn said that it was too good to pass on. Gunn stated that “this is the first step towards income tax elimination, but it’s a crucial first step,” and said he would continue to fight for complete elimination. READ MORE: Mississippi Legislature proposes another tax cut. The plan would eliminate the 4% bracket immediately starting in 2023, at a cost estimated at $185 million. It then reduces the remaining bracket to 5% to 4.4% over the next three-years. Gunn stated that the first $18,000 earned by a single tax filer will be exempted from tax and the first $36,000 earned by a married couple. When fully implemented, the total cost of the program will amount to $525 million per year. “This tax reduction is the biggest in Mississippi’s history. It is also responsible,” stated Lt. Governor. Delbert Hosemann is the Senate’s president and has been instrumental in the fight to stop the elimination of the income-tax entirely this year. “Our constituents expect that we will fund the core government services in infrastructure and education as well as healthcare. Our budget experts have assured me that we can continue doing this and greatly reduce the tax burden on hardworking Mississippians.” House leaders and Senate leaders are at odds over the extent of tax cuts in the 2022 legislative session. Gunn and his leadership team insist that a plan be passed during the current session, which is set to end April 3, to phase out the state’s income tax. This account for approximately one-third of the general fund revenue or almost $2 billion. Reeves, who has stated that he will “do whatever it takes to ensure” that an income tax elimination plan is in place for this year, has also weighed in. Saturday’s compromise was unexpected against all that background and the proclamations of Gunn and Reeves stating that the elimination of income tax must be done this year. Josh Harkins (R-Flowood), Senate Finance Chair, said that “we have been discussing this for a while.” “It got so far that there was a deadline.” The Saturday deadline for reaching agreement on a tax reduction under the legislative rules was Saturday at 8 p.m. House and Senate negotiators announced Saturday’s meeting. They presented the four-year plan to reduce, but not eliminate, the income tax. However, the agreement contains language that states legislators intend to review the state’s revenue situation by 2026 in order to determine if further tax cuts can be made. Trey Lamar (Republican, House Ways and Means Chair), stated that if state tax collections are growing, legislators could continue cutting income taxes and could eliminate them completely in 10 to 12 year. The tax rate will stay at 4% if lawmakers do not act. Gunn stated that he expects the governor to sign the legislation and continue his efforts to eliminate income tax. Gunn stated that Mississippi will have the fifth lowest marginal rate among the 41 states that have a personal income tax when the plan is fully implemented. Both the Senate and House are expected to vote on this plan by Sunday afternoon. Gunn stated that the plan, if fully implemented within four years, will result in savings of $417 per year for a single tax filer earning $40,000 or $834 for a married couple making $80,000. Harkins called this plan historic. Hosemann and Harkins opposed the elimination of the personal income tax, but they proposed cutting it. Despite the state’s record revenue collection, they noted that state economist Corey Miller had stated that much of this growth was due to $35 billion in federal COVID-19 federal aid funds. They said that they were opposed to the completion of elimination in a period of economic uncertainty due to multiple factors such as supply chain issues and inflation, and Russia’s invasion Ukraine. Harkins stated that the future could see additional tax cuts or elimination of income taxes. Although leaders reached an agreement on the tax reduction plan, they continued to work over the weekend to agree on a state budget as well as the $1.8 billion in federal COVID-19 relief funding funds. These federal funds will be used in a variety of areas including local water and sewer needs, and strengthening state agencies such as child foster care system and mental health facilities. All of these agencies are facing federal lawsuits, or the possibility of federal suits due to substandard conditions. Some have suggested that the state cannot afford to cut large taxes despite its current surplus. Gunn expressed optimism that the Legislature will pass a budget before Tuesday. This would allow the session to conclude on time next weekend.