Another day, another deadline at the Mississippi Capitol, and it appears that one major proposal will not advance—at least for the time being.
The Senate has adjourned for the day without taking up the House proposal, authored by Speaker Philip Gunn, to eliminate the state income tax. The bill aimed to phase out the tax over the next ten years while also cutting the grocery tax from 7 to 3.5% and raising the state sales tax from 7 to 9.5%.
Introduced and passed by the House quickly in late February, it appears that the Senate didn’t feel they had enough time to study the lengthy bill and its potential outcomes.
“The bill is not going to be brought up this year, but we are going to be studying it over the summer,” Senate Finance Committee Chairman Josh Harkins told YallPolitics.
This afternoon, Gunn wasn’t ready to concede the bill’s death quite yet, saying that the House is looking at other “avenues” to keep the legislation alive. Those efforts are already underway as it seems that the House has added the language of HB 1439 into another bill.
Rep. Trey Lamar is presenting an amendment to SB 2971(Bond bill) that would resurrect HB 1439(MS Tax Freedom Act of 2021) #msleg
— Mississippi Statewatch (@MSStatewatch) March 16, 2021
Speaker Gunn had previously explained this bill as a way to expand the state’s tax base while shifting toward consumption-based taxes rather than taxing hard work.
“This policy is based on consumption. That puts the control of the tax in the hands of the consumer. Consumers will now have control of how they spend their dollars, which we strongly believe they know how to spend their money a whole lot better than the government. We’re putting the money back in the hands of the consumer they then control what tax they want to pay, and if they don’t want to pay the sales tax on an item, they don’t have to buy the item,” Gunn said.
The proposal has been endorsed by economist Arthur Laffer, who served under President Ronald Reagan, and a report from Ole Miss economists predicted that the income tax elimination would add $371 million to the state Gross Domestic Product. Those arguing against the bill believe that the state wouldn’t be able to replace the $1.9 billion that the income tax provides, roughly 1/3 of the state budget. Additionally, some see the raise of the sales tax and increased taxes on additional products as something that could negatively affect businesses.
Check out Speaker Gunn’s argument for the elimination of the income tax below: