Tax Freedom Act passes House, 107-4, headed to Senate
By Speaker of the House Philip Gunn
I believe there is nothing more significant your legislature can do to help you financially than to let you keep more of your hard-earned money. This allows you to better provide for your family, increase your quality of life, give more to your church and community, and increase the economic prosperity of our State. That is why I proudly co-authored the Mississippi Tax Freedom Act of 2022, which passed the House of Representatives by a bipartisan vote of 107-4. This bill is now headed to the State Senate.
Under this bill: 1) your car tag taxes will immediately be cut in half; 2) your grocery taxes will eventually be reduced from 7% to 4%, and 3) your state income tax will eventually be completely eliminated.
NOW is the time for tax relief. State revenues have never been higher. Through December 2021, general fund revenue collections are up more than $1 billion. We have over $1 billion in the Capital Expense Fund. We have $556 million in the Rainy Day Fund. We are better positioned now more than ever to provide tax relief. If we don’t do it now, we all know what will happen – this money will get spent. That is not the direction that this State needs to go. NOW is the time to give the taxpayers back some of THEIR money!
The Legislative Budget Office (LBO) has estimated that the House Plan will provide a net tax cut of about $250 million in FY 2023 and $665 million in FY 2024. At full implementation, the Mississippi Tax Freedom Act will provide over $2 billion in tax relief to Mississippians. It will be the most significant tax cut in our state’s history.
Of course, some of this lost revenue will need to be replaced. We accomplish that with a plan that uses a combination of both growth and a slight increase in the general sales tax only from 7% to 8.5% - but rest assured that this slight increase in the sales tax will not create any hardship on any family. (Note – this slight sales tax increase does NOT apply to cars or trucks.)
You will always keep more money in your pocket by eliminating your income tax and reducing your car tags tax and grocery tax than you will ever spend by increasing the sales tax by 1.5 pennies. Why is that? Because the overwhelming majority of what you spend your money on is not subject to a sales tax. There is no sales tax on your mortgage; your home utilities, medicine, gasoline, insurance, grocery tax, and car tag tax are all being reduced. Those expenses will not go up in cost by increasing the sales tax. Only about one-fourth of what you spend is subject to a sales tax. To reiterate, you will never spend more by raising the sales tax 1.5 pennies than you will get back by eliminating your income tax and reducing your car tag and grocery tax.
The math proves this. For example, taxpayers receive an immediate exemption from taxation for their first $40,000 of income under this bill ($40,000 per taxpayer, $80,000 per married couple). That puts roughly $1,300 back into that taxpayer’s pocket immediately ($2,600 per married couple). If the sales tax goes up 1.5 pennies, that person would have to spend $86,000 before they use up that $1,300. And here is the kicker – they would have to spend $86,000 on stuff subject to the sales tax.
As stated above, most of what you spend your money on is not subject to a sales tax; therefore, you would have to spend $86,000 on stuff subject to the 1.5 sales tax increase before you use up the $1,300 you get to keep by eliminating your income tax. You will never do it. After seven years, the exemption rises to $100,000 per taxpayer, $200,000 per married couple. That puts about $4,300 ($8,600 per married couple) back into the pocket of taxpayers at that income level. That taxpayer would have to spend $285,000 before using up the $4,300. Again, they will never do it. You will always have more money by eliminating your income tax and reducing your grocery tax and car tag tax than you will ever spend by increasing the sales tax by 1.5 pennies.
Do not be deceived by those legislators or other state leaders who want to pull the wool over your eyes and tell you that they will not vote for this bill because it increases the sales tax by only 1.5 pennies. That makes for an easy sound bite, but it is also an easy cop-out. Most of all, it is simply not supported by the math above, which proves they are not being honest with you. Even if you are retired and don’t pay income tax, you will still benefit under this plan.
Also, do not be deceived by those who want to use words such as “tax reduction,” “tax reform,” “tax cut,” or some other derivative like this. This is an attempt on their part to “check a box” and make you think that they have provided you with some sort of tax relief when they have done nothing for you. Do not let your legislator get away with this. The Mississippi Tax Freedom Act provides tax ELIMINATION! Any plan proposed that does not offer tax elimination is simply an attempt to pull the wool over your eyes, check a box, and make you think you got tax relief when in reality, you did not.
Again, the math bears this out. For example, one plan being discussed simply eliminates the 4% tax bracket. That only puts $200 a year into your pocket – about $16 per month. That tiny amount is not going to transform anybody’s life. But under our plan, your entire income tax burden is eliminated. That is transformative tax relief! That will change lives. That will provide more money for you to provide better for your family, raise your children, give more to your church and community.
The time is NOW for tax relief. The House has overwhelmingly passed this bill 107-4 with bipartisan support. The financial relief you stand to gain under this bill now rests in the hands of your State Senator. We are hopeful they will adopt this plan, so that you can finally get the tax relief you deserve.