Originally posted with Rea S. Hederman Jr. at The Center Square.

The Magnolia state plans to eliminate its personal income tax. This will help Mississippi join its northern neighbor Tennessee and several other nearby states in not taxing work or investment. The eight states without an income tax, like Florida, Texas, and Tennessee, have historically been among the fastest-growing states in the country.

Mississippians should feel encouraged that their elected officials are boldly helping the state become more attractive to new businesses and individual opportunities. Only business and investment taxes are worse than income taxes in discouraging economic growth, and Mississippi has positioned itself for stronger growth soon.
The tax plan gradually phases out the income tax first by reducing the tax rate from 4% to 3% by 2030. The march to zero will be completed as the state hits surplus triggers to ensure the state can eliminate the income tax responsibly.

Mississippi Center for Public Policy’s Responsible Mississippi Budget holds spending down to no more than the average taxpayer can afford, helping to support larger surpluses for income tax reductions. This surplus trigger for tax cuts instead of just revenue triggers helps eliminate income taxes quickly and supports more economic activity.

This could lead to an $830 million tax cut, which would increase business investment by $420 million, consumer spending by $210 million, total state economic output by $790 million, and employment by 5,000 jobs. Given these sizable increases in economic activity, the dynamic effects of such a pro-growth approach would result in a $770 million tax cut rather than the $830 million static estimate.

As economic growth compounds over time, the state will find it easier to achieve zero income taxes. While Washington state enacted a new income tax in 2022, removing it from the list of eight no-income tax states, more states are enacting good tax policies that move to a flat or no-income tax. These states become more attractive for additional business investment or relocation, which helps workers in the state.

Reducing income taxes for everyone is a much better economic policy than an industrial policy that gives away tax breaks to big businesses to lure them to a state. By eliminating the income tax, Mississippi benefits everyone instead of only powerful companies or those with the best lobbyists. This tax plan gives the state a competitive advantage over some of its neighbors.

The state is prudent with its new tax plan. By gradually reducing tax rates over time using revenue triggers, the state ensures that unexpected budget shortfalls will not create a fiscal crisis for Mississippi.

Policymakers should be further incentivized to limit spending to implement the tax reform even faster. While lower taxes create future economic growth, the tax cuts will not pay for themselves immediately as businesses take time to complete investments and expand production facilities and services.
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No one likes paying taxes. April 15th is a time of dread for most taxpayers. But this April, Mississippians have a reason to cheer because of the state legislature's actions and Gov. Tate Reeves. Mississippi is poised to become one of the top ten states for income tax policy and can look forward to more jobs and economic prosperity for generations.

Originally posted at Kansas Policy Institute.

​Kansas is finally gaining ground in the race for economic competitiveness.

According to the newly released Rich States, Poor States 2025 report by the American Legislative Exchange Council (ALEC), Kansas improved its economic outlook ranking from 30th in 2023 to 27th in 2024—and now to 23rd in 2025. That’s the state’s best performance in years, showing how pro-growth reforms are starting to pay off. Notably, this jump comes even before the latest round of income tax relief–by overriding Gov. Kelly’s needless veto of further tax reductions just last week–takes effect.

The ALEC-Laffer rankings are based on 15 forward-looking policy variables that shape a state’s economic trajectory, including tax rates, labor policy, and fiscal stability. Kansas moved up the list mainly because of efforts to flatten income taxes, maintain right-to-work protections, and remove specific barriers to business investment. And unlike high-tax states stuck at the bottom, such as New York (50th) and California (48th), Kansas is showing that it’s ready to compete.

But improving rankings only tells part of the story.
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A true economic transformation requires sustained fiscal discipline. The Responsible Kansas Budget, released by us at the Kansas Policy Institute, shows that the state still has a serious spending problem. In FY 2025, the Kansas budget was $8.5 billion higher than if the state funds budget had increased by just the rate of population growth plus inflation since 2005 and $56 billion higher cumulatively since then.

​Unfortunately, last week, a Texas-sized budget with California-style spending passed the Texas House with 26 members (19 Republicans and 7 Democrats) voting against it. It will soon go to a conference committee. Instead of lowering the tax burden on hardworking Texans, the bill focuses on progressively expanding government. Texans deserve better!

Meanwhile, Americans are feeling the effects of poor economic policies across the nation, which will only worsen if the administration continues pushing tariffs and ignoring better solutions. Trade agreements, tax cuts, and spending restraint offer a more effective path forward, and time is of the essence as March’s jobs report clearly shows we are edging towards stagflation.

Dive into these issues and more on this week’s episode of This Week’s Economy. Get the full episode on YouTube, Apple Podcast, or Spotify, and visit my website for more information.

​Don't miss my recent interview on NTD News: https://www.ntd.com/house-budget-resolution-a-step-in-the-right-direction-as-large-deficits-not-sustainable-economist_1060006.html

Originally posted at Kansas Policy Institute. 

Kansas took a major step toward lasting, sustainable tax reform with the passage of Senate Bill 269—a forward-thinking bill that rewards responsible budgeting with gradual income tax reductions. Predictably, Gov. Kelly vetoed the bill before being overridden by the House and Senate during their annual Veto Session. This all veto-override back-and-forth seems somewhat predictable as the measure initially passed both chambers with veto-proof majorities. Now that Gov. Kelly was rightly corrected in her veto, Kansans should understand how this policy, if executed properly, could reshape the state’s tax code and fiscal future for the better.

Unlike previous attempts at tax reform that lacked spending control, SB 269 is grounded in fiscal discipline. The bill creates a mechanism for lowering individual and corporate income tax rates over time—but only if two key conditions are met:
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1. State revenues must exceed inflation-adjusted 2024 revenue levels.
2. The state’s Budget Stabilization Fund must hold at least 15% of general fund revenues.
   
   

If those conditions are satisfied, tax rates would step down automatically each year as state revenues increase—eventually flattening the personal income tax to 4%, reducing corporate rates, and cutting bank tax rates to as low as 2.6%. It’s an innovative design that avoids past mistakes and ties tax relief to economic performance and spending restraint.

Americans for Prosperity-Kansas rightly praised the Legislature for prioritizing sustainable relief. State Director Elizabeth Patton said, “SB 269 makes our state more competitive, paving the path for a strong economic future.”

She’s right—and there are data to back it up.

According to our research at Kansas Policy Institute, Kansas’ general fund spending has grown by more than $2.5 billion since 2020—well above the rate of population growth plus inflation. This excessive growth has not translated into better outcomes. For example, student achievement remains stagnant, with roughly half of Kansas students below grade level in reading and math despite record-high K-12 spending.

SB 269 responds to that by incentivizing lawmakers to live within their means. If spending stays under control, taxpayers benefit. If not, rate reductions pause. I’ve long advocated for this kind of sustainable budgeting approach through the Sustainable Budget Project: tie spending to the maximum rate of population growth plus inflation and use surpluses to cut taxes—not grow government. If the general idea sounds familiar in The Sunflower State, check out our annual Responsible Kansas Budget. 

Critics argue that SB 269 doesn’t provide immediate relief. And it’s true—taxpayers won’t feel the impact this year. But that misses the bigger picture. This bill lays the foundation for real reform that can endure—not just through one legislative session, but for generations.

As Sen. Caryn Tyson put it, “We’re going to reign that growth in by creating a step-down.” And that’s exactly what Kansas needs: to shift from reactive policymaking to a proactive, principled approach.

Meanwhile, state budget forecasts are strong. General fund tax collections were more than $1 billion higher in FY 2023 than in FY 2020. Rather than hoard that surplus or expand programs that aren’t delivering results, SB 269 directs future excess revenue to flatten the tax code, giving back to the families and businesses that earned it in the first place.

And the structure isn’t just good policy—it’s good economics. Lowering marginal tax rates makes Kansas more competitive for investment, talent, and job creation. That means more opportunity for all Kansans—not just those lucky enough to navigate today’s complex tax system.

Governor Kelly made her choice: She blocked the path to a stronger, more competitive Kansas. Kansans deserve better than bloated budgets and overpromised programs. They deserve a tax code that grows with them—not against them. SB 269 is a smart step forward. Thankfully, the Kansas legislature limited the future excessive taxation of taking more of what citizens earn by overriding Gov. Kelly’s veto.