Mississippi is one of few states to impose a grocery tax. As leaders debate the state’s tax structure, many ask: Is our tax on food fair?
Mississippi is among just 13 states that place a sales tax on groceries.
If Gov. Tate Reeves and Speaker Philip Gunn get their way, Mississippi will remain among the minority of states taxing groceries but will become the 10th state that does not tax earned income.
Reeves has proposed that in addition to dealing with the COVID-19 pandemic during the upcoming session that the Legislature also pass a bill to phase out the state’s income tax. Gunn has said he supports the effort.
“We have been trying to find ways to develop a more solid, fairer tax structure,” Gunn said recently.
Many believe Mississippi’s 7% tax on groceries, bread, milk and baby food is about as unfair as a tax can be.
No other than the late Alan Nunnelee, as respected in conservative circles as any Mississippi politician in recent years, said as much during his tenure in the Mississippi Senate where he championed the reduction or elimination of the tax on food.
Nunnelee, who died in 2015 while serving in the U.S. House, told the New York Times in 2007 the sales tax on groceries “is just the most cruel tax any government can impose.”
The argument, of course, is that it is much more of a tax burden for a poor person to buy that gallon of milk, loaf of bread or baby formula than it is for a wealthy person. But both the wealthy and poor are going to buy essentially the same gallon of milk or loaf of bread.
Reeves and Gunn believe that eliminating the income tax will spur economic development and, apparently, is also a “fairer” endeavor to undertake.
Of eliminating the income tax, Reeves said, “Right now, the global economy is chaotic. We have the chance to attract investment and high-paying jobs. We need to produce more products here and grow our population. We need to make a bold move to capitalize on the growth possibilities.” That bold move is phasing out the income tax.
Mississippi first enacted a sales tax during the Great Depression when the existing meager income tax was not producing enough revenue to fund state services.
Michael Leachman, vice president of state fiscal policy for the Center for Budget and Policy Priorities, points out that former Mississippi Gov. Mike Conner, who proposed the sales tax increase, said, “There are today in Mississippi thousands of people who pay no taxes, but who enjoy all the rights and privileges of citizenship. These people will be glad of an opportunity to share in the responsibility of maintaining the government of the state in which they live.”
There has long been the argument that the sales tax is fair because people who own no property to tax or who have no income to tax still will have to pay the sales tax when they buy food.
Leachman argues that Mississippi, which he said enacted the first modern day sales tax, did so at least partly for racial reasons. Even if Mississippi politicians are given a huge benefit of the doubt on the issue of race that history tells us they might not deserve, it is fair to assume that a high percentage of people whom Connor was referencing as paying no taxes were African American. After all, because of the higher levels of poverty among Black residents, they had then and have now less property and income to tax.
Many of the states where the higher sales taxes can be found are in the South. And only three states levy as much sales tax on food as they do on other retail items. Two of those also are southern states — Mississippi and Alabama — with the other being South Dakota.
In the 2000s, the Mississippi Legislature, led by then-Republican Lt. Gov. Amy Tuck and by other Republicans, such as Nunnelee, did vote to phase out the sales tax on food. But then-Gov. Haley Barbour, who shared the views of Gunn and Reeves that it would be economically advantageous and fairer to reduce the income tax, vetoed the legislation.
Barbour never got the opportunity to reduce the income tax during his tenure — in large part because of the economic and financial conditions the state faced.
Some question whether Mississippi in 2021 can afford to phase out the income tax, which accounts for about one-third of state general fund revenue, at a time when there are so many other needs.
Another question might be: Which is fairer for Mississippi to cut — the tax on income or on food? The answer to that question depends on who you think should be paying taxes.
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