The Mississippi Tax Commission, appointed by Governor Haley Barbour, recently produced a promising draft report of recommendations for Mississippi's tax code. Even more importantly, all indications are that the final version will be even better.
Among the major recommendations: Increase the standard deduction, as well as the personal and dependent exemptions. Eliminate numerous sales tax exemptions, and expand the tax to include more services. Hike the state's third-lowest in the nation cigarette tax rate, but don't dedicate those likely unsustainable revenues to any specific program. Participate in the Streamlined Sales Tax Agreement. Consider combined reporting. And finally, undertake steps to make the state's gas tax a more sustainable source of transportation revenues.
The Mississippi Economic Policy Center (MEPC) worked closely with the Commission throughout the process of drafting its recommendations, and has offered some additional recommendations (both in this formal statement, and in this policy brief) to which the Commission has been receptive. Among the ideas floated by MEPC and not already included in the draft report: Implement a state EITC. Cut the state's grocery tax rate (Mississippi is one of only two states that provides no relief from the sales tax on groceries). Index the standard exemptions and deductions to inflation. Broaden the state's low and narrow income tax brackets. Develop a capacity for tax incidence analysis. And improve data collection on the effectiveness of state tax credits.
It will certainly be exciting to see the final version of this report, and how it influences state tax policy in Mississippi.