House and Senate pursue separate leads on Mississippi tax cuts

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Sen. Scott DeLano, R-Biloxi, introduces an appropriations bill for a vote in the Senate chamber at the Mississippi Capitol in Jackson, Tuesday, March 15, 2022. Lawmakers face a deadline for initial action on appropriations and revenue bills from the other house. (AP Photo/Rogelio V. Solis)

PA

The Mississippi House and Senate are moving forward with separate tax cut proposals, and leaders will hold final negotiations later this month.

Chairman Philip Gunn said on Tuesday he remained firm in his desire to phase out the income tax over several years.

“It’s a good thing to let citizens keep more of their hard-earned money,” Gunn said at a rally in the Capitol rotunda. Other Republicans — and only one Democrat, Rep. Tom Miles de Forest — stood behind Gunn as he spoke.

The Senate on Tuesday adopted its latest proposal to reduce income tax but not eliminate it. The Senate plan would leave a top tax rate of 4.6%, down from the current 5%.

“I think it’s a measured approach,” said Senate Finance Committee Chairman Josh Harkins, a Republican from Brandon.

The Senate plan also includes a six-month suspension of the gasoline tax of 18.4 cents per gallon. Republican Lt. Gov. Hosemann said the state would take $215 million from a capital expenditure fund and give it to the state Department of Transportation to offset the temporary loss of gasoline tax revenue. Several states are trying to suspend gasoline taxes as prices rise.

Republicans hold large majorities in the House and Senate, but there is no guarantee leaders will agree on a final plan to send to Republican Gov. Tate Reeves.

Mississippi has enjoyed strong tax recoveries in recent months, in part due to federal spending during the COVID-19 pandemic. Democratic Sen. Hob Bryan said Tuesday that Mississippi should invest in schools, roads, water and sewage systems and other projects that will improve the quality of life.

“I disagree with the idea that we need a tax cut,” Bryan said.

On Monday, the House adopted the latest version of its plan.

Both plans would reduce the 7% sales tax on groceries. The Senate plan includes one-time income tax refunds of $100 to $1,000, with larger refunds given to people with higher incomes.

Mississippi’s income tax generates 34% of state revenue. Critics say the state cannot afford to cut taxes because it chronically underfunds education and has significant financial obligations to improve its mental health and foster care systems. Mississippi’s poorest residents would see no benefit in eliminating income tax because they are not paying it now.

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Follow Emily Wagster Pettus on Twitter: http://twitter.com/EWagsterPettus.

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