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leading independent tax policy
research organization. Since 1937,
our research, analysis, and experts
have informed smarter tax policy
at the federal, state, and global
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Editor, Rachel Shuster
Designer, Dan Carvajal
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Evaluating Mississippi’s Plan to
Phase Out the Individual Income Tax
• Mississippi House Bill 1439 would phase out the state’s individual income
tax by making the personal exemption more generous over time, funded by
increases to sales and excise tax rates and the dedication of future revenue
growth to the tax’s elimination. The legislation also phases in a reduction of
the sales tax on groceries from 7 to 3.5 percent.
• Many states have found success with lowering, or going without, an income
tax, and reducing reliance on the individual income tax would improve
Mississippi’s economic competitiveness. It is, however, important that
policymakers get the details right.
• Phasing out the individual income tax through incremental expansions of the
personal exemption is inferior to an approach which gradually lowers rates.
• At present, there is no publicly available fiscal note indicating how much
revenue is generated from each offset. This is important in evaluating the
impact on businesses, which would have many of their inputs taxed at higher
rates under the proposal, and in ensuring that policymakers have identified
adequate offsetting revenues.
• With the bill now headed to the Senate, lawmakers should take the time that
remains (the deadline for the bill to be approved by the Senate in some form
is March 16th) to ensure that the final legislation is sustainable and will enable
Mississippi to meet its goals.
Senior Policy Analyst
Vice President of State Projects