Taxation is a method of collecting financial resources from individuals and organizations for government use. For state governments, taxes take on many forms and are collected from different venues. Many states employ taxes on income, retail sales, and real property. In addition to the more common taxes, most states employ special taxes that reflect their unique geography, culture, and economic condition.
Mississippi’s tax structure is often classified as regressive, meaning that the people with less ability to pay have a heavier tax burden. Conversely, a progressive tax is one in which individuals with a greater ability to pay contribute a higher percentage of their income in taxes. Compared to most states, Mississippi’s tax structure is indeed regressive because it depends heavily on the sales tax and has relatively low property and income taxes, but this approach is fairly similar to that taken by neighboring states.
An example of the regressive nature of Mississippi’s tax structure is its taxes on food. Mississippi has the nation’s highest state sales tax—7 percent—and the state does not exempt food. Most states with a sales tax do not tax groceries, while other states tax sales of food less than other retail goods. In addition, municipal governments may level additional taxes on food or other items. Revenue received by Mississippi state and local governments from retail sales taxes accounts for close to one-third of the total budget, a percentage higher than most states but in line with neighboring southern states such as Alabama, Louisiana, Arkansas, Georgia, and Tennessee.
Mississippi has a gas tax of 18 cents per gallon; local governments may also add taxes and fees. Again, neighboring states impose similar taxes, ranging from 16 to 21.5 cents per gallon. Mississippi’s tax on cigarettes is 68 cents a pack, and Mississippi taxes beer at 43 cents a gallon, a rate that is on the high end when compared to neighboring states.
In the early 1990s the state of Mississippi legalized casino-style gaming. The state taxes the casinos’ gross receipts at a rate of about 12 percent.
Property taxes fluctuate greatly within any state as a consequence of local governments’ rates. When comparing state rates and exemptions given to homeowners and farmers, Mississippi is near the average among southern states. When compared to all states, Mississippi is below average in property tax rates.
Mississippi has a graduated income tax rate: filers who make five thousand dollars or less per year are taxed at 3 percent; those who make between five thousand and ten thousand dollars per year are taxed at 4 percent; and anyone who makes more than ten thousand dollars per year is taxed at 5 percent. These rates are similar to those of neighboring states with the exception of Tennessee, which does not tax earned income.
- Federation of Tax Administrators website, www.taxadmin.org
- Kevin B. Smith, Alan Greenblatt, and Michele Mariani, Governing States and Localities (2007)
- Stateline website, www.stateline.org