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NASHVILLE -- The Tennessee and Alabama tax systems are among the nation's worst when it comes to favoring the rich over the poor and middle class, according to a study by a Washington-based research organization.
The Institute on Taxation and Economic Policy, a liberal-leaning group, ranked Tennessee No. 4 and Alabama No. 10 in terms of having the most "regressive" tax structures.
Regressive tax systems take larger percentages of incomes for state and local taxes from poorer people than from richer. The Tennessee and Alabama rankings landed both states on the Institute's "Terrible 10" list of most regressive states.
Georgia did not make the list of the 10 worst, but the group said Georgia state and local taxes are also "typically regressive."
While doing better than the poorest Tennesseans and Alabamians, middle-class taxpayers also paid more as a percentage of income than their wealthier peers, the study found.
"Virtually every state has a regressive tax system," said Matthew Gardner, lead author of the report, "Who Pays? A Distributional Analysis of the Tax Systems in All 50 States."
"But these 10 states stand out for the extraordinary degree to which they have shifted the cost of funding public investments to their very poorest residents," he said.
Tennessee's problems, according to the Institute and Tennesseans for Fair Taxation, which lobbies for tax equity, is that it relies too heavily on sales taxes and other consumption-based taxes. The state also has no broad-based income tax.
Chattanoogan Grant Law, a member of Tennesseans for Fair Taxation, said in the group's news release that it is long past time to redesign "our current, highly regressive system of taxation" in Tennessee.
State Sen. Dewayne Bunch, R-Cleveland scoffed at the assertion that Tennessee tax system is among the nation's worst.
"The actions of citizens across the country moving to Tennessee don't back up that claim," said Sen. Bunch, who had not seen the report. "Whether you're going to start a company or whether it's Volkswagen or whether it's just somebody wanting to start a small company with two or three employees, they're all coming to Tennessee" and other low-tax states.
The report states:
* Tennesseans making less than $17,000 pay on average pay 11.7 percent of their income on state and local taxes. Those making $29,000 to $47,000 paid 10.8 percent 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 of their income on state and local taxes.
* In Alabama, the 20 percent of people making less than $16,000 paid 10.2 percent of their incomes on state and local taxes versus 4.8 percent paid by the 1 percent of residents who made $384,000.
* In Georgia, those making less than $16,000 on average paid 11.7 percent of their income on state and local taxes. The top 1 percent of residents making $433,000 or more typically paid 6.9 percent of their income on taxes.
The study excluded the elderly.
Andy Sher is a Nashville-based staff writer covering Tennessee state government and politics for the Times Free Press. A Washington correspondent from 1999-2005 for the Times Free Press, Andy previously headed up state Capitol coverage for The Chattanooga Times, worked as a state Capitol reporter for The Nashville Banner and was a contributor to The Tennessee Journal, among other publications. Andy worked for 17 years at The Chattanooga Times covering police, health care, county government, ...
If those groups want to pay more tax I'm sure the government will accept a contribution.
Those groups are only suggesting that the middle class and the poor not be burdened with an unfair amount of taxes. Just look at the figures. In Tennessee those making more than $155,000 pay 4.5 % of their income in taxes and those making $17,000 or less pay 11.7% of their income in taxes. Obviously this is not equitable and I doubt the solution is for all Tennesseans to pull themselves up by their bootstraps and achieve incomes of $155,000 or more apiece. Sen. Bunch's comments are totally off the subject. What does VW have to do with it. I suppose that the people at VW who decided to come to Tennessee make more than $155,000 annually so maybe that is how he relates it. And this is not about people who want to start a company with two or three employees either. Tennessee is not a "low tax state." Tennessee is a "low tax on the wealthy" state.
Interesting that the more vocal conservative posters have nothing to say about this report. Am I to guess that they are in the upper incomes stated? Or perhaps (more likely), they fall in the middle income brackets and realize they carry the burden of the taxes, but God forbid they denounce this inequality in a conservative state.
Wake up people, the rich and big business care nothing about the middle classes. They are perfectly happy letting us carry the burden while distracting people with "family values" issues while stealing from us.
Think about this during the debate on health care. Do you REALLY think the Repubs are trying to help you with health care, or trying to protect the profits of the rich and big business?? http://www.marketwatch.com/story/health-care-ends-bonanza-decade-on-bright-note-2009-11-19
Of course those who make little or no money pay more (percentage wise) than those who actually have a job. So what else is new.
If you earn $0, then paying $1 of tax is infinity percent. Duh.
In actual dollars, "rich" and middle class taxpayers pay less in percentage terms because they actually have jobs. No kidding!
Fair taxation? Take the total amount needed to run the state government and divide it by the number of citizens. Everybody pays the same amount. Now that is fair.
I bet that would lead to drastic reductions in overall state spending. Anybody want to take me up on that one?
If anything, poorer citizens should pay more because they use more state services. How many upper income citizens actually use public schools? Not many ... most of them send their kids to private schools because they want them to actually get an education. Likewise, most middle to upper class citizens actually have their own insurance so they don't have to be a burden on TennCare.
So tell me again why our current tax structure is bad? The ones who use the most state services pay the highest percentage (sounds fair to me). But, the ones who use the most state services pay the lowest overall amount (sounds unfair to me).
Those who use the services ought to pay for them. Sounds like we need a more "regressive" tax system to me. It's all in how you define the terms.
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