Below is a political opinion column by Sid Salter:

• Columnist Sid Salter writes that Mississippi’s property taxes have remained historically low because of low property values, but that status is evolving, as in other parts of the country.

As Mississippi legislative leaders consider further tax reform in the upcoming regular session of the Mississippi Legislature in 2025, attention will turn to further cuts in the state’s income tax and further consideration of reducing the state’s 7% grocery tax, the nation’s highest.

Mississippi House Speaker Jason White has already spoken of focusing his efforts on further state income tax cuts and reducing the grocery tax. In recent years, lawmakers have passed a $525 million income tax cut – the largest in state history – that is expected to be fully implemented within two years.

The issue of property taxes is generally absent from debates over tax cuts in Mississippi. Why? That’s because property taxes in Mississippi are primarily the responsibility of county and local governments. As a result, property tax issues are not debated frequently or with great enthusiasm in the legislature unless they are fueled by advocates of local governments.

In a national comparison of the 50 states, Mississippi ranks in the bottom third of states in property taxes and is ranked 37th by the Tax Foundation as an indicator of business climate. One of the reasons for the low property taxes here is that state leaders decided that one way to keep property taxes low for property owners was to enact a retail sales tax, the first in the country, in 1934.

Mississippi’s property tax policies – including the property tax exemption, the economic development tax exemption, the industrial tax exemption, and other provisions – create an environment in which property tax rates remain low. The bottom line is that property taxes have remained historically low in Mississippi due to low property values.

This status is developing in Mississippi, as it is in other parts of the country. Real estate prices are rising here and in some areas of the state these increases are dramatic. Inflationary influences are also playing a role.

In Mississippi, as in most states, rising property values ​​lead to higher property taxes, even if the property tax rate is not increased. Higher property values ​​mean higher taxes. Here, too, local governments take the lead in collecting property taxes and rely on the revenue.

How dependent? The Lincoln Land Institute, a nonprofit foundation, summarizes the relationship as follows: “The ad valorem tax, or property tax, is the primary source of revenue for each of the 82 counties in the state of Mississippi. Local governments and public schools (K-12) also rely on property tax collection, with schools funding about a third of their budgets with property taxes. The state relies heavily on sales tax, and municipalities receive a portion of the sales tax collected within their city limits. Mississippi taxes both personal property and real estate. In 2021, taxes on personal property accounted for 29.4 percent of its tax base, a higher share than in any other state that classifies personal property.”

So when state leaders talk about cutting grocery taxes or other sales and excise taxes, local governments fight those efforts on the grounds that if those cuts are implemented, they would be forced to raise property taxes.

The historic success of the Mississippi sales tax in broadening the state’s tax base during the Depression kept it in place long after the national economy recovered, and the state’s property tax payers were the beneficiaries. The shifting of the tax burden from primary landowners to all citizens was intentional.

Stateline.org reports that there are currently property tax reform referendums in at least eight states (Arizona, Colorado, Florida, Georgia, New Mexico, North Dakota, Virginia and Wyoming). In addition, lawmakers in other states have introduced property tax refund legislation, while others have introduced bills to adjust property tax assessments.

Jared Walczak, vice president of state projects at the business-friendly Tax Foundation, told Stateline he expects many other states to follow suit.

The same observation from January still holds: Given that Mississippi has a Republican majority in both houses of the legislature and Republican strength in many of the state’s districts with the highest property values, can a fight over property tax relief be too far in the future? And how much longer can lawmakers avoid correcting the state’s flawed ballot initiative process?

— Article courtesy of Sid Salter, for the Magnolia Tribune —