2 Southern states aim to end personal income taxes

Apnews - Apr 6th, 2025
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Mississippi and Kentucky have initiated plans to eliminate their state income taxes, a move not seen in over 45 years. Mississippi's plan, signed by Republican Gov. Tate Reeves, aims to gradually reduce the income tax rate from 4% to 3% by 2030, with potential elimination by 2040, contingent on economic growth. The state also plans to reduce grocery sales taxes and raise gasoline taxes. Kentucky's approach involves a series of tax rate reductions, with recent legislation lowering the rate from 4% to 3.5% by 2026 and setting conditions for further cuts. Despite potential economic benefits, these measures raise concerns about increased reliance on other taxes, which might disproportionately affect lower-income residents.

This tax-cutting trend follows a surge in state revenues post-COVID-19, yet comes in a period of economic uncertainty, with potential federal funding cuts due to Trump-era policies. States like Oklahoma and Missouri are also considering similar measures, reflecting a broader shift in tax policy. The implications of this trend are significant, as these states must balance attracting business and investment with maintaining essential services funded by income taxes. Critics argue that these moves could lead to financial instability, particularly if federal support decreases or if economic growth does not meet expectations.

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RATING

6.8
Fair Story
Consider it well-founded

The article provides a comprehensive overview of recent legislative actions in Mississippi and Kentucky to reduce or eliminate state income taxes. It accurately reports on the key facts and presents a balanced view by including perspectives from both proponents and critics of the policy changes. The article is timely and relevant, addressing ongoing debates about state tax policies and economic strategies in the wake of the COVID-19 pandemic. While the article is well-structured and easy to read, it could benefit from greater transparency regarding the data or studies supporting its claims and more diverse sources to enhance its credibility. Overall, the article effectively informs readers about the potential impacts of state income tax elimination and encourages consideration of the broader implications for economic development and fiscal policy.

RATING DETAILS

8
Accuracy

The article accurately reports on the legislative actions taken by Mississippi and Kentucky to reduce or eliminate state income taxes. It correctly identifies Mississippi's plan to reduce the income tax rate from 4% to 3% by 2030 and potentially eliminate it by 2040, contingent on revenue growth benchmarks. Similarly, it accurately describes Kentucky's approach to gradually lowering the income tax rate through legislative approval of revenue-based triggers. However, the article could have provided more detailed economic analyses or studies to support claims about the potential economic impacts of these tax changes, such as increased consumer spending or economic growth. The mention of other states considering similar measures, like Oklahoma and Missouri, is also factually correct. Overall, the article presents a well-researched overview of the topic, though it could benefit from additional data to substantiate its claims about economic outcomes.

7
Balance

The article presents a balanced view by including perspectives from both proponents and critics of income tax elimination. It highlights the arguments of supporters, who believe that reducing income taxes will attract businesses and residents, while also presenting the concerns of critics, who warn about potential over-reliance on regressive taxes like sales taxes. Additionally, it mentions the potential financial risks if federal funding decreases. However, the article could improve its balance by providing more in-depth perspectives from economists or financial experts on both sides of the debate. Including more voices from affected communities, such as low-income residents who might be impacted by increased sales taxes, would also enhance the article's balance.

8
Clarity

The article is well-structured and clearly articulates the main points regarding the legislative actions in Mississippi and Kentucky. The language is straightforward and accessible, making it easy for readers to understand the complex topic of state income tax policy. The logical flow of the article helps readers follow the progression of the argument from the legislative changes to the potential economic impacts. However, the article could improve clarity by defining some of the technical terms used, such as 'revenue growth benchmarks,' for readers who may not be familiar with tax policy jargon.

6
Source quality

The article references statements from key figures, such as Mississippi Governor Tate Reeves and analysts from the Tax Foundation and the Institute on Taxation and Economic Policy, which adds credibility. However, it does not provide direct citations or links to primary sources, such as the actual legislative texts or detailed economic studies. Including more diverse sources, such as academic experts or independent financial analysts, would strengthen the article's credibility. The reliance on statements from government officials and nonprofit organizations provides a good foundation, but the article would benefit from a broader range of authoritative sources.

5
Transparency

The article provides a clear overview of the legislative changes in Mississippi and Kentucky but lacks detailed explanations of the methodologies used to project economic impacts. It does not disclose any potential conflicts of interest or biases that might affect the reporting. The article would benefit from greater transparency regarding the data or studies that support its claims about economic growth and the effects of tax changes. Providing more context about the historical and economic factors influencing these legislative decisions would also enhance transparency.

Sources

  1. https://economictimes.com/news/international/global-trends/no-us-state-has-ended-personal-income-taxes-since-1980-but-mississippi-and-kentucky-may-change-that/articleshow/120031466.cms
  2. https://governorreeves.ms.gov/gov-reeves-signs-historic-legislation-eliminating-mississippis-individual-income-tax/
  3. https://economictimes.indiatimes.com/news/international/global-trends/no-us-state-has-ended-personal-income-taxes-since-1980-but-mississippi-and-kentucky-may-change-that/articleshow/120031466.cms
  4. https://taxfoundation.org/research/all/state/state-tax-reform-relief-2023/
  5. https://rpea.org/resources/retirement-information/pension-tax-by-state/