New study touts tax reform ideas for Mississippi

A new special report by the Tax Foundation touts several tax reform ideas for Mississippi that also were part of the Center for a Better South's policy work on tax reform in 2006. In Doing Better, the Center suggested modernizing income tax brackets, reducing sales tax exemptions and several other ideas. According to the new study on the Magnolia State, the Tax Foundation suggests:

In the area of business taxation, Mississippi should (1) repeal at least one of its corporate franchise, inventory, and intangibles taxes, thus reducing compliance and tax burdens while giving the state a comparative advantage over its neighbors; (2) resist calls to raise corporate tax rates or add new brackets, which would be at odds with the global trend of attracting business by lowering corporate tax rates; (3) flatten brackets because multiple rates on corporate income achieve no logical or progressive goal; (4) adjust brackets annually for inflation and conform to the federal tax base, to reduce compliance costs; (5) eliminate or reduce special incentives; and (6) resist calls to adopt economic nexus.

In the area of sales taxes, Mississippi should consider (1) eliminating the sales tax on machinery and other business-to-business transactions, to reduce tax pyramiding and economic distortions; (2) broadening the sales tax base while lowering the sales tax rate, to improve neutrality and reduce administrative complexity; and (3) avoiding gross receipts taxes, which are economically harmful and distorting.

In the area of personal income taxes, Mississippi should consider (1) flattening brackets, adjusting brackets annually for inflation, and conforming to the federal tax base, all to reduce compliance costs; and (2) resisting calls to raise personal income taxes or add additional brackets, which would punish entrepreneurs vital to economic growth and give up one of the state's best competitive advantages.