Just Taxes Blog by ITEP

Mississippi Is the Latest in a String of States Pursuing Short-Sighted, Top-Heavy Tax Cuts

January 19, 2022

A flagship piece of ITEP’s state work is Who Pays?, a comprehensive look at the tax codes in all 50 states and the District of Columbia. The conclusion of the report has remained the same for the 25 years that we’ve produced it: The vast majority of state tax codes are regressive and contribute to widening economic inequality. In years when we don’t produce this major report, we provide distributional analyses to state advocates who are working toward more progressive tax policies that allow state and local governments to raise the revenue they need to fund critical priorities. This year, we are producing one analysis after another demonstrating how proposed tax cuts are skewed toward the rich. This is alarming. The highest-income households literally grew richer over the pandemic while many ordinary families lost jobs. States that cut taxes for those at the top will not only compound economic inequality, they will miss an opportunity to invest in their communities.

An egregious example of short-sighted tax-cut fervor happened last week in Mississippi. The House passed a bill that would gradually eliminate the state income tax, increase the general sales tax by 1.5 percent, reduce the sales tax on groceries from 7 percent to 4 percent, and cut the car tag tax. Altogether, the proposal would cost the state more than $1.5 billion in revenue and lavish most of the benefits on the wealthiest residents. House leadership has tried to frame the proposal as a benefit for low- and middle-income residents because it includes a grocery tax cut, but when taken together, the bill increases taxes for the state’s lowest earners and seniors on fixed incomes while saving wealthy households thousands of dollars.

Not only is the proposal deeply inequitable, Mississippi simply cannot afford it. Lawmakers are nonsensically trying to use a one-time surplus (thanks to federal aid that was intended to help low-income communities weather the pandemic) to make long-term, structural tax changes that will perpetually widen the economic gulf. House leadership is also trying to pull a clear ‘bait and switch’ by enacting popular state tax cuts at the expense of local budgets. By cutting the car tag tax, municipalities will likely be forced to eventually make budget cuts or enact regressive fines and fees that will further exacerbate racial inequities.

I shared a few more thoughts on Twitter about the tax bill passed out of the Mississippi House of Representatives:

There are better ways to leverage tax systems to help those who need it most.


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