Reeves: Logjam on tax cut could force special session
Mississippi Gov. Tate Reeves said he’s not ruling out the possibility of calling a special legislative session to seek the elimination of the state income tax if the House and Senate reach a consensus. deadlock on the issue.
Lawmakers face deadlines later this month to agree on tax and budget bills for the year that begins July 1. The regular three-month session is scheduled to end on April 3.
The Republican governor said Friday he was trying to limit special sessions to matters of “significant importance.”
“I think the elimination of income tax is an issue that could definitely get to that level,” Reeves told a news conference.
Mississippi is one of the poorest states in the nation, but it has enjoyed strong tax collections in recent months, in part due to federal spending during the COVID-19 pandemic.
“Eliminating the income tax will make Mississippi more competitive,” Reeves said.
Mississippi’s income tax generates 34% of state revenue. Critics say the state cannot afford to cut taxes because it chronically underfunds education and has significant financial obligations to improve its mental health and foster care systems.
House Speaker Philip Gunn is pushing to phase out the entire state income tax. Lieutenant Governor Delbert Hosemann, another Republican, advocates eliminating some, but not all, of the income tax.
Legislatures in several states are considering tax cuts this year, including in South Carolina, where a bill to cut income taxes has received bipartisan support.
The Mississippi House and Senate passed separate tax cut proposals. Senate Bill 3164 would eliminate some of the income tax, while House Bill 531 would phase out the income tax over several years. At least one of those bills must survive the Wednesday deadline to keep the issue alive in the regular session.
Both bills would reduce the 7% sales tax on groceries. Both would reduce the cost of car tags, with a larger reduction proposed by the House. The Senate bill includes one-time income tax refunds of $100 to $1,000, with larger refunds given to people with higher incomes.
Mississippi has a 7% sales tax on most other items, including clothing. The Senate plan would not change that, but the House plan would increase it to 8.5%.
The sales tax increase would have a disproportionate effect on low-income people. Poorer residents would see no benefit in eliminating income tax because they are not paying it now.
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