It’s because the state has a thin, outmoded tax structure whose burden depends too heavily on the state’s huge poorer population and doesn’t make its more affluent population pay its fair share. Symptomatic of the latter point was the report of the PEER staffers showing that 91 of the state’s 130 top corporations paid zero corporate tax.
State Tax Commission annual reports have shown for some years, corporations only pay one-third of the income taxes collected by the state. Individuals pay two-thirds of the taxes collected. That proportion is badly out of whack. In most other states the ratio between individual and corporate taxes paid is the reverse.
A major reason for Mississippi’s income tax revenue imbalance is that corporations pay the same rate of tax as individuals. The top bracket of the income tax is 5 percent for both individuals and corporations, whereas most states have a separate – and higher – tax bracket for corporations.
Seven years ago, the John C. Stennis Institute in a study funded by the W.K. Kellogg Foundation found that by just increasing the top bracket 1 percent, the state would realize a minimum revenue increase of $248 million. Obviously, 1 percent would yield even more now. (Emphasis added.)
If you are interested at all in our state's government, this article is a must read. Not only does Minor talk about the corporate income tax problem, he goes into detail about how we got in this mess and why it will be difficult to get out of it.