The study by Washington, D.C.-based ITEP found lower-income Mississippians pay 10.4 percent of their income in taxes; wealthier Mississippians, 5.3 percent.
It analyzed tax systems and considered state and local taxes, including personal and corporate income taxes, property taxes, sales and other excise taxes.
Bryant’s proposal, included in his executive budget recommendation, would offer a nonrefundable tax credit for families with state tax liability. “Only those who are paying taxes will be allowed to take the tax credit,” Bryant said in November.
He says the proposal would provide a break ranging from more than $400 a year to about $100 a year, depending on income, for an estimated 300,000 Mississippi families. It would be available in 2016, for those filing their 2015 taxes.
The tax credits would be limited to years with at least 3 percent state revenue growth and provided the state’s “rainy day fund” is full, which it is now, with more than $400 million.
Bryant said it would be about $79 million, but he expects it would pump money back into the economy, ergo state coffers.
Sara Miller, senior policy analyst for the Mississippi Economic Policy Center, said the state’s tax structure creates the disparity.
“We rely so heavily on sales taxes,” she said. “And since they apply to almost everything lower-income people buy, there’s no way to avoid them. We’re one of a couple of states that still apply the full sales tax to groceries. That’s a big part of it.”
Fixing that would require what Miller called “targeted tax relief,” something similar to Bryant’s proposal. “It’s definitely a good first step,” Miller said. It could be improved by upping the threshold that triggers state income tax liability (currently about $10,000) and making the tax credit refundable.
Matt Gardner, ITEP executive director, echoed Miller, saying the refundable tax credit would help to offset the impact of sales and property taxes.
That lack of an offset is one of several ITEP listed as reasons why Mississippi’s tax structure is regressive, to go with the grocery tax. Of the five states that apply their full sales tax to unprepared foods, Mississippi is one of two that does not offer some kind of assistance to low-income families.
“Upside down state tax systems didn’t cause the growing income divide, but they certainly exacerbate the problem,” Gardner said. “State policymakers shouldn’t wring their hands or ignore the problem. They should thoroughly explore and enact tax reform policies that will make their tax systems fairer.”
Tepid attempts to remove groceries from the state’s sales tax in prior legislative sessions have failed. Similar legislation has not been filed this session.
“This is a timely issue, because lawmakers are talking about tax reform,” Miller said. “Any reform should be carried out in such a way that it benefits the people who need it most.”
Contact Clay Chandler at (601) 961-7264 or cchandler@jackson.gannett.com. Follow @claychand on Twitter.
By the numbers
Income limits would be based on those used for federal tax credits. They would be:
•$46,997 ($52,427 married filing jointly) with three or more children
•$43,756 ($49,186 married filing jointly) with two children
• $38,511 ($43,941 married filing jointly) with one child
•$14,590 ($20,020 married filing jointly) with no children
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