As lawmakers consider a bill eliminating the state income tax, two Ole Miss Economists have evaluated the legislation and their findings indicate taxpayers will greatly benefit – and so will the state.
In the report dated March 5th, Joshua Hendrickson, Ph. D., and Ron Mau, Ph. D., analyzed the effects of House Bill 1439, the Mississippi Tax Freedom Act of 2021. The professors found that, when fully implemented, the income tax elimination would add $371 Million to the state Gross Domestic Product.
Click here to read the full report.
The professors noted this is the equivalent of increasing the wealth of every Mississippi income tax filer by $8,077.00. These wealth effects are in addition to the direct tax savings taxpayers would receive under the tax elimination plan. The professors further noted that their study shows the income tax elimination plan would be approximately revenue-neutral, which debunks the claims of some that this reform would cause the state to lose revenue for needed programs.
The economists further note that their study likely states the minimum positive benefit from the reform. Their study considered only the reform’s effects on the level of economic activity in the state, not its effect on the year-over-year growth rate. And the study did not take into account the positive effects of increases in population migration to the state due to the reform. Had these additional factors been considered, the positive impact of the reform likely would have been greater.
Gunn said, “The report further demonstrates that HB1439 is based on sound tax policy. Eliminating the income tax will reward work, saving, and investment, and will increase the size of our state economy, all while maintaining the revenues we need to satisfy priorities. Mississippians need the benefits of this tax relief now. I encourage Lt. Gov. Hosemann and the Senate to work with us to pass this tax reform this session.”