Group says Tennessee tax system favors ‘rich’

NASHVILLE — Tennessee’s tax system ranks fourth nationally in terms of its bias “in favor of the rich,” a new report states.

The report from Institute on Taxation and Economic Policy, a liberal-leaning nonprofit think tank based in Washington, says low and middle-income families in Tennessee pay a far higher share of their income in state and local taxes than the wealthiest families.

The study found that Tennesseans making less than $17,000 pay on average pay 11.7 percent in taxes while those making $155,000 to $414,000 on average paid 4.5 percent. Those making $414,000 or more on average paid 3.3 percent.

John Stewart, chairman of Tennesseans for Fair Taxation, which lobbies on tax equity issues at the state Capitol, charged in a statement that “over the years the rich and powerful elites, in collaboration with the governor and General Assembly, have shaped Tennessee tax policy for their own benefit at the expense of the poor and middle class.”

The group advocates a fairer state tax system, which includes a state income tax, saying it would reduce overall taxes for most families.

The Institute on Taxation and Economic Policy blames Tennessee’s reliance on sales and other consumption taxes and flat-rate privilege and license fees for much of the bias. Tennesseans for Fair Taxation said lower-income taxpayers pay a greater share of state taxes because a larger portion of their income is spent on necessities such as food, clothing and fuel, which are taxable.

The group said higher-income households have more disposable income to spend on “luxury” services such as maid, limousines, pool cleaning and charter plan as well as investments such as real estate, which are not taxable at the state level.

“That’s right,” the group stated in its news release. “While you’re groceries are taxed at 7.75 percent to 8.25 percent, their limousine ride is tax-free.”