Mississippi income tax elimination plan will die in Senate | State Government

Tuesday is the deadline for the Senate to consider House Bill 1439, the Mississippi Tax Freedom Act, and multiple senators said they did not expect to do so.

There are “a lot of very unhappy people” who dislike the House plan, said Senate Pro Tem Dean Kirby, R-Pearl, adding he doesn’t think anyone in the Legislature fully understands the implications of the 317-page bill.

Sen. Josh Harkins, R-Flowood, leads the Senate Finance Committee and said the House’s proposal needs more research. He said a study committee made of lawmakers from both chambers should meet this summer and agree on an income tax cut plan to be considered in the 2022 session.

“I want to make a prudent decision, I want to make a well-informed decision,” Harkins said.

The House plan proposed cutting the personal income tax within a decade and raising sales taxes to compensate. It would cut the grocery sales tax in half but raise the general sales tax rate from 7% to 9.5%. It would also raise taxes on liquor, farm equipment, cars and trucks, manufacturing machinery and tobacco products.

The plan won widespread support in the House, including from several prominent Democrats. But Harkins noted more review is needed: He and other senators are still sifting through preliminary findings on proposal compiled by the State Economist Corey Miller.

And Harkins added that more than a dozen relatively new Senate members have never before studied the details of the state’s income tax system. A summer study session would give them time to do so, while also nailing down more economic impact details of the proposal, and listening to concerns from various interest groups.

Harkins said he wanted to avoid returning in four or five years to undo provisions of a major tax cut “because we did something wrong.”

With a study committee, “hopefully we’ll come out with a better product,” Harkins said. Forming such a joint legislative committee that meets this summer would require passing a resolution this session.

The finance chair said he appreciated House leaders introducing the legislation, because it had “stirred the consciousness” of lawmakers about how to remake the state’s tax system.

Sen. Walter Michel, R-Ridgeland, said a summer review period would allow multiple interest groups to weigh in, such as restaurants, car sellers and farmers. All would be impacted by rising sales taxes proposed by the plan. Meanwhile, Michel said, lawmakers could seek out more experts to dissect the plan’s numbers. The Mississippi Society of Certified Public Accountants is one group that’s offered to help, he said.

“It came so late in the session, and so many industries are affected,” Michel said of the House plan.

Not everyone is convinced delaying is the best course of action. Sen. Chris McDaniel, R-Ellisville, said lawmakers should move forward with a modified version of the House tax cut plan this session, especially given the state budget is in such healthy shape.

McDaniel said he is opposed to raising sales taxes to compensate for eliminating the income tax. But the legislation should include certain protections, he said, so income tax would only be gradually phased out, and those incremental tax cuts would only occur if state revenue growth targets are met.

“This is that once in a lifetime opportunity to eliminate the income tax, and do it responsibly,” he said. “It’s a no-brainer.”

This story will be updated.