While the typos in the tax compromise legislation sent from the State
Senate to the State House of Representatives last week are garnering
most of the attention from politicos, insiders and those who oppose
aspects of the bill, let’s not lose sight
of the significance of the structural tax changes the legislation could
provide if signed into law.
The legislation provides a path to eliminating the state’s income tax.
However, the typos in the bill deal with a core component—the speed with
which income tax reduction or elimination can or should be
accomplished.
But the compromise extends to other taxes as well, including the sales tax on groceries.
Sales taxes account for about 38.4% of state tax revenues. It is
essential to reflect on how that tax originated. The Great Flood of 1927
fundamentally transformed the state's economy, which was on the brink
of another economic disaster—the Great Depression.
Agriculture struggled to recover after the 1927 flood, so the Great
Depression dealt a second blow to Mississippi's troubled economy.
History recounts that at the beginning of 1932, the State of Mississippi
had a whopping $,1,327.00 in the state treasury with accounts payable
of nearly $6 million. Many Mississippi school teachers had not been paid
in over a year and the pensions of the state’s
Confederate Veterans were likewise unpaid.
Mississippi began 1932 with some $50 million in debt. In April 1932,
one-fourth of the state’s agricultural lands – family farms – were sold
for taxes. Tax sales held in 74 of the state’s 82 counties claimed
roughly 400,000 acres on 40,000 farms from plantations
to small acre homeplaces.
In that 1932 fiscal maelstrom, Mississippi Gov. Mike Conner proposed the
nation’s first sales tax at three cents on the dollar. The Legislature
gave him a two-cent tax that has since grown to a 7% sales tax.
Last week’s tax compromise offers a 2% reduction in the state’s sales
tax on groceries. All sales taxes are regressive – penalizing the poor
more than the wealthy – but after more than a quarter-century of
political infighting, the proposed compromise offers
some relief.
After the inflation endured on groceries during the Biden Administration
and that promised by rising tariffs in the Trump Administration, any
relief on grocery bills will be welcomed by Mississippi shoppers.
Mississippi’s individual income tax accounts for just over 30% of state
tax revenues while the state’s property taxes primarily support local
government sources.
Another intriguing facet of the tax compromise is an increase in the
state’s gasoline tax. The tax compromise calls for adding a total of
nine cents per gallon (CPG) to the state’s gas tax over the next three
years. The only state with lower gas taxes than
Mississippi is Alaska.
Mississippi’s current 18.4 cents per gallon state gas tax (CPG) is a
flat tax. When we paid $3.965 a gallon for gas in 2008, the tax was 18.4
CPG. When we pay $2.42 per gallon at the pump this week, the state tax
is still 18.4 CPG.
The only way the state takes in more revenue in gas taxes is for the
volume of gas consumed to increase – and automobiles are now
manufactured to require less fuel consumption than a decade ago. The
state fuel tax rates haven’t increased since 1987, the last
time the state was particularly serious about improving our highway
system.
The federal fuel tax is also 18.4 cents per gallon and hasn’t changed
since 1993. Neither the federal nor state fuel taxes have kept pace with
inflation. Indexed for inflation, both federal and state fuel tax rates
are insufficient to adequately build and maintain
those infrastructures – but this increase will be a dramatic
improvement in Mississippi over time.
The bill creates a fifth tier in the state’s Public Employees Retirement
System for newly hired state employees after March 1, 2026. In that
plan, 4% of their retirement savings would be placed in a defined
benefit plan and 5% would go to a defined contribution
plan, similar to a traditional 401K. The legislation also eliminates
the Special Legislative Retirement Program, or SLRP, for legislators
elected after March 1, 2026.
Decimals aside, there are a lot of needed reforms in this legislation
that also accomplish the original intent of reducing and eventually
eliminating the income tax. To be sure, the decimal placement matters
but that can be fixed without throwing the proverbial
baby out with the bath water.
Sid Salter is a syndicated columnist. Contact him at sidsalter@sidsalter.com.
24 comments:
I don't care what they say; PERS is headed for a reckoning.
Start charging those who ride bicycles a road tax. They have been gifted special lanes in the last few years to ride upon. I dont recall anybody voting them this perk.
Thank you Mississippi legislature for once again enhancing the reputation of our state. Dumbest legislature in the country.
Where did the money come from for pickleball courts?
The legislation also eliminates the Special Legislative Retirement Program, or SLRP, for legislators elected after March 1, 2026.
Hoorah!
Can we declare bankruptcy and start over? Maybe Mexico will take us? We still owe the feds $100 million for Phil Bryant’s novel use of welfare funds. The federal government appears to be dissolving before our eyes so our only real flow of money is gone. Our sales and property taxes are going to skyrocket to make up for all the lost revenue from income taxes. We have no real industry or prospects for future industry. We are watching a dumpster fire in slow motion.
It seems to me this gas tax is going to hit working people particularly hard. Many people who live in the rural areas drive more than 60 miles one way to work. For example nurses that drive in to metro hospitals, manufacturing workers who commute to Nissan and other facilities in DeSoto county and northeast Mississippi.
We can’t all afford to do as the legislators do and purchase second homes, or even rent second homes in Madison to put their kids in private schools, all under the guise of needing to be in Jackson for committee work.
Some of these guys may need to move back home and see what the working people in their districts are truly dealing with. But I am not a tax lawyer or even a country lawyer so what do I know.
got a great idea-lets use taxes for intended purposes. road and fuel taxes for roads and bridges. and quit taxing my house. its existence should not create a taxable event
I agre
@9:09 Thats just boomers screwing over the younger generations AGAIN! Because they will still get theirs FOR LIFE!
“ The legislation also eliminates the Special Legislative Retirement Program, or SLRP, for legislators elected after March 1, 2026.”
We got ours, just pulling up the ladder behind us. Y’all can pull yourself up by your bootstraps you lazy bums.
Honestly when I read this, I think wow, at the State level, we are better at compromise than I sometimes give us credit for. Tough decisions need to be made in this fiscal dominance environment. This shows we are trying.
We are watching a dumpster fire in slow motion.
And yet you are still here. Let me guess, you rode Worldcom all the way to the bottom.
Shuffling taxes around is not a tax cut. Please do not tell me that our politicians actually think lowering one tax and raising another is cutting taxes. We need to elect new politicians. Some that will work instead of looking to fool the people.
The state sales tax, where it applies, is currently 7%. It’s flat and is the same for everybody (excluding local option adds for tourism and such). But it’s regressive and disadvantages the poor. The current state fuel tax is flat at 18.4 cents per gallon, and will increase by 9 cents to 27.4 cents per gallon. It’s also a flat tax but is good, not regressive, and should be increased, according to Sid. I’m not arguing the merits either way, but how is a flat sales tax regressive and bad, but a flat fuel tax good and worthy of an increase? What am I missing about this logic?
@9:47 AM
At least we "boomers" could and did pay our state income tax . Whatever the whiney younger generations are called enabled Tate to pull this stupid move that will (100% guaranteed) blow up in our faces in a few years.
What typos? What "decimal placement"? What the hell are you talking about, Sid?
I heard they may let Josh Harkins join the group chat due to his exemplary work in the legislature.
Unless I am overlooking something, only the sales tax on groceries is being lowered to 5%. It appears the sales tax on all other categories will still be 7%. Does anyone know if this is correct, or did they state it poorly and the sales tax will be 5% on everything?
March 26, 2025 at 9:47 AM, you need to get your lazy ass up and go make it like we did. But, knowing your kind you're probably living in mama's basement waiting on your inheritance. Lazy clown.
@1:35 PM You are projecting too hard. The discussion is about the boomers in the legislature voting themselves a retirement plan and then excluding a later generation from accessing the same plan. Go take your pills and have a nap, grandpa.
PS I wish I had a basement.
Don't have time to explain it to y'all but I guarantee that elimination of the income tax will lead to a big population migration from western TN to north MS. Because it is already happening even with a state income tax.
Cut all spending. No police. No parks. No museums. Fire all government workers. Close mdot. Close hospitals. Shut it all down.
If they're every going to save PERS, that's the plan....and don't think they won't do it.
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