Jackson Free Press

JACKSON, Miss. (AP) — The Mississippi House and Senate are pushing forward with separate tax cut proposals, and leaders will hold final negotiations later this month.

Speaker Philip Gunn said Tuesday he remains firm in wanting to phase out the income tax over several years.

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

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

“I think this is a measured approach,” said Senate Finance Committee Chairman Josh Harkins, a Republican from Brandon.

The Senate plan also has a six-month suspension of state's 18.4-cents-per-gallon gasoline tax. Republican Lt. Gov. Hosemann said the state would pull $215 million from a capital expense fund and give it to the state Department of Transportation to make up for the temporary loss of gas tax revenue. Several states are trying to suspend gas taxes as prices rise.

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

Mississippi has enjoyed robust tax collections in recent months, partly because of federal spending during the COVID-19 pandemic. Democratic Sen. Hob Bryan said Tuesday that Mississippi should invest in schools, roads, water and sewer systems and other projects that will improve the quality of life.

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

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

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

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