Mississippi is in the process of phasing out the state’s income tax and one lawmaker is optimistic about the impact it will have on the economy.
In 2022, Governor Tate Reeves signed the largest-ever tax cut in state history into law. Under the legislation, Mississippi’s personal income tax began slowly phasing out. As things stand, the income tax is expected to be completely eliminated within 12-14 years.
Skeptics of the legislation expressed concerns that the cuts could have negative ramifications on the state’s budget with less money going back to the government.
Senate Appropriations Chairman Briggs Hopson, R-Vicksburg, on the other hand, argues the contrary. Hopson said in a recent interview on The Gallo Show that the financial relief for taxpayers will end up yielding positive results and boosting economic growth.
“We’ve seen sales and use tax numbers looking pretty good, and that was what we anticipated — that some of those offsets in cuts in individual taxes would end up going back into the economy and help spur the economy,” Hopson said.
Mississippi began Fiscal Year 2024 in July earning $45 million more than the projected total in revenue. Hopson, who oversees the state’s budget, noted that there was a setback in August with the state receiving $3 million below the estimated total — partially due to a downturn in individual and corporate income taxes received.
However, the numbers coming in show that the state is on pace to receive roughly $25 million above the projected amount for September, indicating that the previous month was an outlier and that the tax cuts will not cause the economy to go into a downward spiral.
In fact, the state senator fervently believes that putting more money in the pockets of Mississippi residents through tax cuts will enable them to contribute more to local businesses, which will have a net positive impact on the state’s economy.
“When our citizens have more money, they can use it however they want to. A lot of people use it to buy more food and buy more products,” Hopson continued. “That helps keep businesses going. It’s got kind of a rebound effect when you make smart cuts in taxes.”
With the 2024 legislative session set to kick off in just a few months, it is expected that some lawmakers will propose legislation to speed up the process of eliminating the income tax altogether.