Mississippi State Legislature to Study State Tax Reform
August 5th, 2016
Legislative leaders convened two study panels of lawmakers to evaluate the state’s tax system and the budget. Panel leaders expressed their desire to move away from income taxes toward user taxes [i.e., sales taxes] and to potentially reduce taxes overall.
If you compare the state budget totals over the last five years, it may appear that the state has experienced a significant increase in revenue in recent years. However, analysis of the state budget over the longer term shows that revenue has simply been rebounding from the deep trough caused by the Great Recession and when adjusted for inflation, has not even regained pre-recession levels. The loss of revenue during the recession caused, among other things, teacher layoffs, increased college tuition, and a dramatic shortage of state troopers.
Further, over the last five years, lawmakers have enacted a number of tax cuts, mostly benefiting corporations, culminating in a large $415 million cut to income and corporate franchise taxes. The largest of these cuts, for example, the inventory tax reductions, have included phase-in mechanisms some of which are just now beginning to affect revenue on a significant scale. In fact, last year’s general fund revenue collections came in below collections from the previous year.
Hope Policy Institute evaluates tax reform proposals based on the following two principles:
- Whether or not the changes will maintain adequate revenue to support the public services that promote prosperous communities (schools, higher education, infrastructure, healthcare, and public safety)
- Whether or not the changes will benefit or burden low- and middle-income working families who are struggling to make ends meet and provide for their families
The Hope Policy Institute will be providing analysis of the issues and recommendations from the tax and budget study panels based on those principles. In the meantime, we encourage you to review our resources on tax and budget issues below: