Mississippi Approves Historic Tax Overhaul, Phasing Out Income Tax

Missouri's House of Representatives recently passed House Bill 798, which would significantly alter the state's tax code by introducing a flat income tax rate and eliminating taxes on capital gains, while repealing the Earned Income Tax Credit. Critics warn this could disproportionately benefit the wealthiest households, potentially increasing tax burdens on middle- and low-income families and leading to cuts in public services. Meanwhile, Mississippi Governor Tate Reeves signed legislation to phase out the state's income tax by 2037, reducing it annually and lowering the grocery sales tax from 7% to 5%. This move has been hailed as a significant reform but raises concerns about the loss of $2.6 billion in revenue, which could affect funding for social programs. Both states are making drastic changes to their tax policies, aiming to attract businesses while potentially risking essential public services funding. The contrasting approaches highlight ongoing debates about tax equity and state revenue management in the U.S.