published Thursday, December 22nd, 2011

Tennessee taxes and jobs

Some Tennessee lawmakers are raising questions about whether Tennessee's tax on the estates of the deceased -- also known as the "death tax" -- may be driving some people out of Tennessee, thus harming economic growth.

State Rep. Joe Carr, R-Lascassas, said he knows half a dozen people who have moved out of Tennessee to avoid paying the "death tax," The Daily News Journal in Murfreesboro reported. "Men and women who have the ability to create jobs are leaving the state," he said.

Other lawmakers have raised similar concerns about both Tennessee's "death tax" and the "Hall income tax." The Hall tax is not a "general" income tax, but is levied only on dividends and interest earned from stocks and bonds.

Gov. Bill Haslam has said the two taxes harm economic development in Tennessee because they "chase capital away from the state."

However, the governor has understandably expressed concern, in the current weak economy, about finding a way to replace the revenue that would be lost if both the "death tax" and Hall income tax were abolished.

At a minimum, though, it would be sensible to determine whether some people who could be investing and creating jobs in Tennessee are, in fact, leaving Tennessee and going to states without such objectionable taxes. That certainly would not be unheard of.

In the five years before New Jersey enacted massive tax increases -- including an increase in a tax specifically targeting the wealthy -- people moving into the state brought with them $98 billion in wealth. But once the higher taxes were imposed, in 2004, New Jersey lost more than $70 billion in wealth over the next four years! Many higher-income residents of New Jersey simply left the state to avoid paying the higher taxes.

We can see why: The wealthiest 1 percent of New Jersey residents were paying 40 percent of the income taxes in the state!

To make matters worse, a lot of those who fled the higher taxes were better educated, harming the state's work force and growth prospects.

You may or may not worry too much about "the rich." But it was certainly not good for New Jersey's economy when lots of its residents left the state to avoid excessive taxes -- and took with them tens of billions of dollars that might otherwise have been invested in New Jersey.

Could the same thing be happening in Tennessee?

So far, we seem to have mainly anecdotal evidence that some people are leaving Tennessee to seek "greener tax pastures." And we do understand concerns about the short-term loss of tax revenue if the "death tax" and Hall income tax were suddenly abolished.

Nevertheless, it would behoove Tennessee at least to study whether, because of those taxes, Tennessee is suffering a loss of economic development that might outweigh the loss of revenue from eliminating the objectionable taxes.

If Tennessee is losing taxpayers, we should give serious consideration to abandoning both the "death tax" and the Hall income tax.

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my2cents said...

Tennessee is already #1 in Taxes (Not Football) Tennessee 7.00% 2.43% 9.43% 1 The only thing TN doesn't tax is sunshine (They haven't figured how to meter it)

December 22, 2011 at 4:02 a.m.
EaTn said...

For those people who are leaving the state because they don't want to pay their fair share to help maintain their lifestyle--don't let the door hit you in your rear on the way out. We have moving vans that also go in the opposite direction that brought you into the state.

December 22, 2011 at 6:12 a.m.
joneses said...


What is everyone's "fair share". This term "fair share" is weak as there is not a number attached to it. Would you please enlighten us with the exact numbers that make up one's "fair share"? I pay about 45% of my income to state, local, and federal taxes. Am I paying my "fair share"? Are the 47% of people who pay no income taxes and consume more government resources than us that make up the 53% of people paying income taxes paying thier "fair share"? Can you enlighten us without getting personal?

December 22, 2011 at 7:56 a.m.
EaTn said...

Joneses...a fair share is when the percentage contributed is related to benefits received and burden upon the contributor lifestyle and family. Greed would be the opposite of fair share.

December 22, 2011 at 8:11 a.m.
kwjohnso said...

I would like to know where these supposed people are moving to. According to the Tax Foundation, Tennessee has the 4th lowest tax burden in the Unisted States. Let's call this effort by some in our state legislature what it really is - A GIFT TO THEIR LARGEST CAMPAIGN CONTRIBUTORS. If our legislators really want to lower the taxes of TN citizens, a good place to start would be the grocery tax.

December 22, 2011 at 8:59 a.m.
ShaneTalley said...

Joneses I smell a progressive lib dem here, you know "wealth distribution and social entitlement waiting in line to get what you have worked for by the use of your smarts or hard physical work". I guess they are jockying for the next protected class of people.

December 22, 2011 at 9:01 a.m.
Facts said...

Not that it matters, but economic facts are: it takes investment to have businesses. It takes businesses to have jobs. It takes jobs to have citizens who are able to provide for their families and spend & save their income. Where did it start? Investment. Investment comes from individuals who have wealth...not from "Banks", "the government", or Santa. Banks have money from their investors & depositors. Government is supposed to use our tax dollars for the purposes of our Constitution. But mouth-breathing, occupying entitlement whiners want to do everything but work. Governor Haslam needs to be aggressive in keeping wealth in our state. Otherwise, we'll need TnInestCos and other "public-private" partnerships that the Occupyer crowd cries "Corporate Welfare!"

December 22, 2011 at 9:31 a.m.
hambone said...

Facts, What you leave out is DEMAND!

It takes DEMAND to have a need for business.

Without DEMAND what is the invester in the business to do?

Hire customers?

December 22, 2011 at 11:13 a.m.
joneses said...


Is working hard to be more financially secure called greed? Do you think Obama should appoint a Greed Czar? Is Al Gore who is worth about 100 million dollars greedy? Is Nancy Pelosi whose wealth rose from about 40 million dollars to 67 million dollars in the last two years by her investing in insider trading which is allowed for members of congress considered greedy? Do you consider doctors greedy because they chose to work hard to be a doctor versus living off the government? It is my opinion the greediest people in this country are the ones who choose to live off government entitlement programs and give nothing back or do nothing for the conutry but take. I do believe there are those who we want to help but there are also the greediest that take advantage of the entitlement programs and they are greedier than any wealthy person I know. I grow tired of people labeling financial success as greed. What I really find amazing and hypocritical is people like Warren Buffet, Pelosi, Obama, Gore, Kerry making statements that the wealthy should pay more taxes but stop short of writing a check to the government. At the end of the day the Democrats do not really want the wealthy to pay more taxes. If they did why did they not raise taxes on the higher income owners when they had House, Senate and White House. It is class warfare rhetoric which is very unhealthy for this country. One more item. Did you know that the United States 16 trillion dollar debt is 6 trillion dollars more debt than all the debt of the 27 European countries? Did you know that the USA spends 4 billion dollars more each day than it takes in? Did you know that the top 1% do not make anywhere near 4 billion dollars per day? It is a spending problem which cannot be resolved by taxing or confiscating more money from the American people. When Clinton left office the debt was 5 trillion dollars. When Bush left office they debt was 10 trillion dollars and now Obama is approaching 16 trillion dollars after just 3 years. Merry Christmas to all.

December 22, 2011 at 11:21 a.m.
EaTn said...

Facts are it takes a dependable, secure, educated, adequate infrastructure and progressive country to provide the demand which is a basis for any small or large business to flourish. Facts are it takes taxes to provide this foundation which is basic for any business. Anyone from middle income to rich should realize the opportunity this country has provided to them and their family, and to spout that the half that are in the poor category don't pay their fair share is utterly ridiculous.

December 22, 2011 at 11:27 a.m.
EaTn said...

You may call me liberal and I may call you conservative, but we the people can't keep sending blue hogs and red hogs to Washington to breed and wallow in the mire if our intent is to raise thoroughbred horses.

December 22, 2011 at 1:12 p.m.
potcat said...

A-Men to that one EaTn.

December 22, 2011 at 1:18 p.m.
joneses said...


One must wonder how in the world this country prospered without an income tax more than any country in the world for the first 164 years of it's existance. It apears when the income tax was implemented a sense of entitlement began. Another observation is when the government started taking in more money the politicians became more corrupt. I believe the less money and power the federal government has the better off we all will be. Did you know that the 27 conutries that make up Europe have a combined debt of 10 trillion dollars? Did you know the debt of the USA was about 5 trillon after the 8 years of Clinton, about 10 trillion after the 8 years of Bush and is now on track to be about 17 trillion dollars of debt after hopefully just 4 years of Obama? Did you know that if all the income of the top 1% of wage earners was confiscated/taxed it would only be a drop in the bucket of this massive debt? Have we not firgured out that the more power we give government the worst things get? These red and blue hogs need less power and money, not more as we have witnessed through this massive debt the consequences of them having to much power and money. It will do no good to fire them all without at a minimum a balanced budget amendment. Since they will not vote for a balanced budget amendment then we should demand from all our representatives they canot vote themselves a raise unless the budget is balanced. without these adjustments to their power it does not matter what color of hog we send to Washington.

December 22, 2011 at 3:13 p.m.
EaTn said...

joneses..can't disagree with most of your last statement. In fact most of the left and right posters on this site could probably come to a more sensible agreement on how to run our government than the current bunch that are suppose to be representing our interests in Washington. But then we don't have the big-money lobby bunch to influence our decisions.

December 22, 2011 at 3:55 p.m.
joneses said...


Merry Christmas sir.

December 22, 2011 at 8:24 p.m.
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