Submitted by Starla Brown, State Director for Americans for Prosperity

“Eliminating the state income tax altogether would lead to turbocharging the state’s economic and population trends,” Brown writes.

There’s nothing wrong with Mississippi that Mississippians cannot fix. But to meet our challenges, our state needs two things: more investment, and, well, more Mississippians. Leaders in Jackson have come together to work on a plan that eliminates the state income tax. That’s important. It’s also important how the tax is eliminated, so that our state can compete on a more even footing with prosperous regional competitors.

Under Mississippi’s current tax code, our economy is leaking. Our growth rate is positive, but low – less than 1 percent in the most recent quarter. That mirrored the low rate experienced during the five years prior to the Covid-19 pandemic.

Meanwhile, the state’s population fell between the 2010 and 2020 Censuses. It fell again in 2021. How is this possible when more than half of all U.S. population growth is in the South, and when Mississippi boasts one of the highest birth rates in the country? Because young people are leaving – and not just any young people. According to a report by Congress’s Joint Economic Committee, Mississippi ranks near the bottom of the 50 states in “brain drain” – highly educated people today are much more likely to leave the state than move here.

That’s an economic one-two punch. The native-born Mississippians most likely to start businesses, invest in our communities, and grow the state’s economy are departing – and their counterparts in other states aren’t coming.

The problem is not a matter of encouraging or recruiting certain businesses to come or stay, just like a farmer’s job is not to coax just one or another distinct seed to grow. Economic policy is about cultivating a growth-friendly environment, and there is nothing less growth-friendly than taxing the wages and work that actually grow economies.

Likewise, tax policy should unleash growth and remove barriers to opportunity so all Mississippians can improve their lives. The goal of sound tax policy is to streamline our state tax systems to benefit all our citizens, not reward certain groups of people while punishing others.

Today, Jackson is awash in a record state budget surplus of $2 billion. Any state budget surplus that isn’t ARPA funding should be given back to Mississippians, and both the state House and Senate recognize that a refund is due. But looking at the big picture – the state, its economy, and demographics – a simple tax cut isn’t enough. The legislature has to go big, and tax reform must be funded, at least in the short term to balance the budget until businesses and individuals move here instead of our neighboring states, ideally through surpluses or reductions in unnecessary expenditures.

Eliminating the state income tax altogether would lead to turbocharging the state’s economic and population trends.

Consider, three of the top five states Mississippians are moving to – Texas, Florida, and Tennessee – have no state income tax. All three rank well ahead of Mississippi – and national averages – in brain drain, population growth, and especially in economic growth.

It makes sense. Income taxes are a tax on work – they make it harder to create jobs and get jobs. Six other states – Alaska, Nevada, New Hampshire, South Dakota, Washington, and Wyoming have no income tax, either. It’s not a coincidence that according to the U.S. Bureau of Labor Statistics, five of the nine states without an income tax are among the top ten for job growth right now.

Joining them will make our state more attractive to native born Mississippians looking to start their careers, businesses, and families. It will make the state immediately more attractive to existing businesses in other parts of the country, and to would-be entrepreneurs looking to find the best place to lay down roots. And it would draw an influx of post-Covid remote workers, looking for lower costs of living and higher quality of life.

The investments made by the first wave of new Mississippi workers and entrepreneurs will fuel the next, and the next: businesses and jobs serving the new firms, homes to house the new families, grocery stores and restaurants to feed them, etc. This is how growth happens.

All that’s needed is for lawmakers in the House and Senate to come together on a path forward. The governor should work with legislative leaders to ensure the budget surplus does more than just send Mississippians back their money, but instead transforms our economy and lifts our state into a new era of growth, opportunity, and success.

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Submitted by Starla Brown. She is state director of Americans for Prosperity-Mississippi.