Mississippi’s workforce participation rate lags, but is it because of taxes or sushi?

States that consume the most sushi per capita have a higher workforce participation rate than Mississippi.

But wait, states where more venison is eaten also have a higher percentage of eligible works employed than in Mississippi.

No actual research has been done on those statistics, but rest assured they are correct. After all, every state, except for perhaps West Virginia, has a higher workforce participation rate than the Magnolia State.

There have been efforts in recent days to buoy support for Gov. Tate Reeves’ proposal to phase out Mississippi’s income tax by pointing out that the nine states with no tax on earned income have higher — much higher in some instances — workforce participation rates than Mississippi.

It’s an interesting point, but states with the highest tax on income also have higher workforce participation rates than Mississippi. The point is: Mississippi’s workforce participation rate is lower than every state except that of West Virginia.

Still, the argument made that eliminating the income tax would help improve Mississippi’s workforce participation rate is an interesting one since Lt. Gov. Delbert Hosemann has made improving the state’s workforce participation one of his primary goals. Hosemann, as do most economists, cite improving the rate as a way to improve the economy of a state.

In order to steer a proposal to phase out the income tax through the 2021 Mississippi legislative session, which begins Jan. 5, Reeves probably needs buy-in on the plan from Hosemann, who presides over the Senate.

House Speaker Philip Gunn has previously voiced support for eliminating the income tax and appears to be solidly behind Reeves’ proposal to do so during the 2021 session. When asked about the proposal, Hosemann simply said “everything is on the table.” Perhaps the thought is that if the income tax phase-out is linked to increasing Mississippi’s workforce participation rate, Hosemann might be more likely to jump on board.

In fairness, the workforce participation rates of many of the nine states that do not tax earned income are above the national average. Based on information provided by the Federal Reserve Bank of St. Louis, compiled by the Bureau of Labor Statistics, the national workforce participation rate for November was 61.4%. Before the COVID-19 pandemic, it was above 63%. Mississippi’s was at 55.8%, seasonally adjusted for November. Of the nine states with no tax on earned income, six were above the national average. The states with the highest workforce participation rate of that group were South Dakota at 67.9% followed by New Hampshire at 66.3%.

But, of course, most of the states with workforce rates higher than the national average have a personal income tax, most with much higher rates than Mississippi’s relatively low rate. They include Maryland with a 65.8% workforce participation rate and Minnesota at 67.9%.

Incidentally, Kansas had a 68.3% rate in November. In the early 2010s, Kansas famously enacted deep income tax cuts but repealed them in 2018 as state revenue plummeted.

When announcing his plan, Reeves said Mississippi needed the boost that the income tax cut would create.

“We as a state need to think big,” Reeves said in November. “We need to think about not only what can we do to make strategic investments, but what can we do to make a splash.

“What can we do to say to the world not only do we want to invest capital here, (but) we want you to move here? Mississippi needs to see population growth in the coming years. We need more people moving into the state to grow our economy.”

He said phasing out the income tax by 2030 would spur that growth.

Reeves said the states with no tax on personal income are experiencing faster population growth. Many are. The top 10 fastest growing states between 2010 and 2019 include four with no income tax. All nine were growing much faster than Mississippi, which was in the bottom 10 in terms of population growth.

In most categories, measuring a state’s economic vitality — gross domestic product, per capital income, education attainment and so on — most states with or without a personal income tax are ahead of Mississippi.

Former Gov. William Winter, who died earlier this month, used to say, “The only road out of poverty runs past the schoolhouse door.”

No doubt, those states that have had strong school systems for a prolonged period and have high educational attainment levels also are outperforming Mississippi economically.

Some of those states do not have a personal income tax, but most do.

This analysis was produced by Mississippi Today, a nonprofit news organization that covers state government, public policy, politics and culture. Bobby Harrison is Mississippi Today’s senior Capitol reporter.

This story was originally published December 28, 2020 at 12:00 AM.