A recent column on the Mississippi Today website asks a good question: If eliminating the state income tax will fire up the economy and attract residents, as Republican proponents claim, what’s the explanation for DeSoto County’s envious record of growth?
“DeSoto County is unique in that it has gone head-to-head against an area with no income tax on wages and has won in terms of population growth,” columnist Bobby Harrison observed.
Harrison is referring to the county’s location on the Tennessee state line, bordering Memphis. While Tennessee has no state income tax, DeSoto County, as part of Mississippi, applies a 4% and 5% tax on income.
Yet DeSoto County’s population increased by 16% in the 2020 census. Shelby County, where Memphis and its Tennessee suburbs are located, reported only a 1% gain.
Proponents of phasing out the income tax will correctly argue that there are other factors in play. It certainly is true that the two counties are very different. Much of Shelby County is a big city, while much of DeSoto County is the textbook definition of a suburb.
Shelby County’s population is about 940,000. DeSoto County, even with three decades of large population gains, has only 187,000 residents in the new census. Its population is 80% less than its northern neighbor — which gives it plenty more room to grow.
Harrison noted white flight from Memphis as a possible factor, but he also pointed out census figures that said DeSoto County’s Black population is growing. In 2010, 21% of its residents were Black. That figure rose to 30% in 2019.
Most likely, people who relocated from Shelby County to DeSoto County during the past decade did so for quality-of-life issues, such as good schools and affordable housing. They may have decided an income tax was a small price to pay to be in a great place to raise a family.
Republicans from Gov. Tate Reeves on down who want to get rid of the income tax have a bad case of Texas-Florida-Tennessee envy. Those three states have no personal income tax and are growing rapidly.
There’s no sin in wanting to be like the big guys. But Mississippi’s smaller, less wealthy, more rural population makes us a lot different. We have no Houston, Dallas, Miami, Orlando, Nashville or Memphis to serve as a population center or a job magnet.
Eliminating the personal income tax sounds appealing until you consider what the likely tradeoffs would be: higher sales taxes at the state level and higher property taxes at the local one.
If lawmakers are serious about keeping more earnings in the pockets of workers instead of in the state treasury, they should look at chopping into the 7% sales tax as a starting point.
Mississippi’s income taxes are among the lowest in the country. Its sales taxes are among the highest. Reducing the sales tax to give lower- and middle-income workers a little more spending (or saving) money sounds like good policy for America’s poorest state.
