Mississippi Senate proposes $316M in tax cuts, setting up showdown with Speaker Gunn

Mississippi Senate Finance Committee Chair Josh Harkins unveiled a plan to cut income and grocery taxes Tuesday, setting up a showdown with House Speaker Philip Gunn, who favors complete elimination of the income tax.

Harkins' plan would eliminate Mississippi's 4% income tax bracket over four years, cut the state's grocery tax 2% and eliminate state car tag fees. Figures from the Legislative Budget Office and Mississippi Department of Revenue show Harkins' plan would result in a $316.6 million elimination of tax revenue for residents if the cuts become law.

"We are enthusiastically supporting this plan," Lt. Gov. Delbert Hosemann said.

The plan also provides a one-time rebate for those who paid state income tax on their 2021 filing, with a minimum rebate of $100 and a maximum of $1,000. The rebates are based on a person's 2021 filings and would return about $130 million to taxpayers.

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Harkins, R-Flowood, said the proposed cuts would not result in any reduction of government services.

"It does leave us room to do the things we've talked about," Harkins said. "Raising teacher pay, all the priorities we've set forth, it covers all that."

The plan to gradually eliminate the 4% bracket comes in the final year of the 3% bracket phaseout lawmakers approved in 2016. The Legislative Budget Office estimates the state would lose $46,250,000 a year for four years until the 4% bracket is eliminated.

As it stands now, the state's 4% bracket applies to a single filer's first $5,000 of taxable income. The remaining income is taxed at 5%.

Gunn, R-Clinton, is in favor of completely eliminating the personal income tax, and passed a bill through the House earlier this session. It is the second year in a row Gunn has passed such a bill. The two chambers will likely have to compromise on tax cuts going forward.

Mississippi Gov. Tate Reeves has said for months he wants the legislature to completely eliminate the personal income tax without any other tax raises to offset the lost revenue. Mississippi collects about $2 billion annually from personal income taxes, a third of the state's annual revenue.

Although it would be a net tax cut, Gunn's plan would raise the state sales tax to 8.5% to help offset the lost revenues. Gunn's plan would reduce state revenue about $1.5 billion.

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On Tuesday, Reeves told reporters he still supports the elimination of the income tax, but would be open to other options.

"If there are bills that are filed that reduces overall taxes by one-hundred million or a billion that doesn't raise other peoples' taxes that we can afford, I'm going to be supportive of that effort," Reeves said.

Harkins said he plans to reveal a more detailed plan and the accompanying legislation in the coming days.

Lee O. Sanderlin is an investigative and political reporter covering the state of Mississippi. Got a story tip? You can call him at 601-559-3857, send it to LSanderlin@gannett.com or message him on Twitter @LeeOSanderlin.

This article originally appeared on Mississippi Clarion Ledger: More income tax cuts proposed in Mississippi Legislature