Income tax study confirms state continues to tax the poor unfairly

Published 2:44 pm Wednesday, April 11, 2012

The latest study of state income taxes confirms that Mississippi continues to tax its poor unfairly.

The Center on Budget and Policy Priorities, a nonprofit research group, rated Mississippi among the states with the highest state income taxes paid by people living below, at or marginally above the federal poverty level.

For example, a two-parent family of four making $23,018 a year — the federal poverty line for a family that size — would have paid $103 in Mississippi income tax in 2011.

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While Alabamians in the same circumstances paid more than five times as much, at $548, Mississippi was 13th in the country. (And in 1994, that same family would have paid no income tax.)

What’s worse is that Mississippi is among three states (with Arizona and Ohio) that have effectively lowered, not raised, the income tax threshold since 1991. (The threshold is the point at which income becomes subject to state taxes.)

In 1991, Mississippi’s threshold was 114 percent of the federal poverty line. In 2011, it was 85 percent. For example, Mississippi begins taxing a single-parent family of four at $19,600.

Even Alabama raised its income tax threshold, although it is the second lowest in the country and $7,000 under Mississippi’s threshold for that same single-parent family of four.

People with lower incomes end up being taxed disproportionately, especially in a state like Mississippi that also taxes the sale of food. Regardless of what the federal government says, $23,000 doesn’t go far enough for most if not all families of four.

As a result, the federal center notes, families with poverty-level incomes are unlikely to spend money on anything but necessities; and the overall economy is hurt when people can’t afford to spend. …

“Simply getting rid of the income tax is not an option,” said the Mississippi Economic Policy Center. “Instead, the solution is to tailor the tax codes to reflect the realities of working families.”

The latest figures confirm that Mississippi needs to restructure its income tax to relieve the crushing burden on the poor. They deserve a chance to overcome their circumstances.

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