Mississippi lawmakers to study tax cuts with committees, summit

The two presiding officers of the Mississippi Legislature have formed special committees to further their goals of providing additional tax cuts during the 2025 legislative session.

On Tuesday, House Speaker Jason White, who earlier this year formed a special tax cut study committee, announced a day-long policy summit on tax cuts for Sept. 24. Also on Tuesday, Lt. Gov. Delbert Hosemann, who presides over the Senate, announced he has formed a special committee to study the state’s fiscal policy.

The committee will be led by the chairs of the Senate’s two money committees, Senate Appropriations Chairman Briggs Hopson and Finance Chairman Josh Harkins.

“Our ultimate goal is always to lower the tax burden and ensure taxpayer dollars stay in taxpayer pockets,” Hosemann said in a news release. “This requires Appropriations and Finance leadership to be at the table looking at all income and expenses to ensure we are being as efficient as possible while fully funding necessary services.”

Both Gov. Tate Reeve and White have advocated eliminating the state’s income tax, which accounts for about 30% of the state general fund revenue, while White also has spoken of reducing the state’s grocery tax.

Hosemann has voiced support for at least reducing the 7% grocery tax, which is the highest statewide tax on food in the nation.

Hosemann has said that ensuring the fiscal integrity of the state should not be ignored when looking at tax cuts.

The income tax generates about $2 billion a year while it has been estimated, based on a 2019 study, that the grocery tax generates about $325 million a year. But the grocery tax would generate much more now than in 2019 because of the significant increase in grocery prices. Since the 7% sales tax is imposed on the cost of groceries, state Economist Corey Miller has said that inflation has provided significantly more revenue from the grocery tax in recent years for the state.

In 2022, the Legislature passed and Reeves signed into law a $525 million income tax cut that is currently being enacted. When fully enacted in 2026, income in Mississippi will be taxed at a rate of 4%.

In addition, a business tax cut enacted in 2016 is still being phased in — $42 million annually through 2029 before fully enacted.

The clamor for additional tax cuts has been intensified in large part because of the unprecedented growth in revenue collections in recent years. Most states have experienced similar growth thanks primarily to the large influx of federal funds provided to states primarily to deal with the COVID-19 pandemic. In addition, revenue growth has been aided by Mississippi being so heavily reliant on the sales tax for its revenue. As prices of retail items have increased during the inflationary period, that has resulted in the 7% sales tax being levied on more expensive items generating more revenue for the state.

Still, during the past year, revenue collections have been slowing. For the past fiscal year, which ended June 30, the state collected only $18.4 million or .24% more than was collected the previous year.

And if not for collecting $68.7 million or 84.4% more in interest earnings than the previous fiscal year, the state would have been in the rare situation of collecting less revenue than the previous year for only the sixth time since 1970. Higher interest rates have spurred the increased earnings on the unprecedented surplus funds the state currently has.

Multiple speakers are scheduled for White’s tax summit at the Sheraton Refuge in Flowood, including Gov. Reeves, legislative leaders, other state officials and legislators from Arkansas who have worked on tax cuts in the neighboring state. National tax cut proponent Grover Norquest also is scheduled to speak.

“It is exciting to be assembling this policy summit that will be free to the public to encourage engagement from all interested parties so lawmakers, tax experts, and any Mississippian can partake in robust conversation that will lead to a better, brighter Mississippi,” White said in a news release.

Other members of the Hosemann study group include Sens. Andy Berry, Bradford Blackmon, Rod Hickman, Chris Johnson, Dean Kirby, John Polk, Derrick Simmons and Daniel Sparks.

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