The Tax Foundation ranks the states

*From the March 26 edition of the Laurel Chronicle

As we approach that dreaded day – April 15 – I thought it appropriate to highlight findings from the recently released “Facts & Figures: How Does Your State Compare?” by the Tax Foundation. The Foundation began publishing this handy guide of state tax ranks in 1941 in order to “give a broader perspective…dissipate predilections and prejudices…and to meet the challenge presented by the broad problems of public finance.”

As a nonpartisan educational organization, the Tax Foundation is a fantastic resource on taxes. I’ve even thought about donating money to the group, which I guess is super nerdy. (Hey, we’ve all got our causes.)

Tax Foundation research is guided by the following principles of sound tax policy: Simplicity, transparency, neutrality, stability, no retroactivity, and broad based/low tax rates. In other words, these are the principles to which policymakers should adhere in order to develop tax structures that generate sufficient revenue while encouraging economic growth and treating taxpayers fairly.

Here are some of Mississippi’s facts and figures as highlighted in the publication.

March 29th is our “tax freedom day,” which represents how long Mississippians have to work into the year before they have earned enough money to pay all federal, state, and local taxes for the year.

Mississippi ranks in the top twenty states on the competitive business tax climate index, which takes into account corporate income, individual income, sales, unemployment insurance, and property taxes. Our state has the 17th most competitive business tax climate in the nation, with the 5th most favorable tax in the nation on unemployment insurance.

Important to any discussion on taxes is the makeup of how state and local governments get their revenues. In Mississippi, 27.5 percent of tax revenues are generated through property taxes; 32 percent through general sales taxes; 15.1 percent through individual income taxes; 3.8 percent through corporate income taxes; and 21.7 percent through other taxes such as excise or severance taxes.

In Fiscal Year 2011, Mississippi collected $504 in individual income taxes per capita. When accounting for local tax collections, this figure falls to $470 per capita.

While our seven percent general sales tax rate ranks second highest (tied with Indiana, New Jersey, Rhode Island, and Tennessee), our average local tax rate is virtually zero (Mississippi doesn’t typically allow the levying of local sales taxes, although the City of Jackson is a notable example otherwise). Our combined rank on sales taxes is 20th in the nation.

All in all, I guess Mississippi ranks pretty middle-of-the-road when it comes to taxes. We excel in some areas yet lack a competitive tax structure in others. We could do a better job adhering to the principles outlined by the Tax Foundation, and that’s something to keep in mind.

As local and state government revenues increase with an improving economy, policymakers should govern with an eye toward reforming our tax structure to become even more competitive with surrounding states. The 2014 Facts & Figures guide by the Tax Foundation would be a good place to start those discussions.