published Monday, January 23rd, 2012

A wall against tax fairness

Tennessee's Republican legislators would have the state's voters and citizens believe that they are doing them a great favor by promoting an amendment to the state Constitution to ban the creation of a state income tax. How wrong they are.

Writing a clear ban against an income tax into the state Constitution would only cement, perpetuate and worsen the gross inequity in taxation that now falls on the vast majority of Tennesseans from the highest and most regressive level of state sales taxes in the nation.

Creation of a progressive income tax would not only make it possible to significantly reduce, or eliminate, the regressive sales tax. It would also shift a fairer portion of the state's tax burden to the state's more affluent earners, who now pay a disproportionately low share. Such a shift, earlier studies confirm, would lower the total state tax burden now paid by more than two-thirds of Tennessee families -- the middle to lower-income families with incomes below $55,000 a year.

These are the Tennesseans who bear the brunt of the inequity of the current sales tax, which with local sales taxes amounts to nearly 10 percent. They are ones who deserve an honest tax break, not the richer Tennesseans who always have paid an unfairly small share.

The reason the sales tax burden is so regressive is that a large majority of Tennessee families do not make enough money to set aside much, if any, in savings. They must spend all of their income just to pay their bills and mortgages, to buy groceries and help their kids pay for college. Because they're forced by economic necessity to spend all of their income, they end up paying state sales taxes on a far higher percentage of their income for basic necessities than do more affluent Tennesseans.

More affluent citizens pay less in states sales taxes, as a percentage of their income, because their higher earnings allow them to avoid state sales taxes simply by saving or investing more, or by spending outside the state on travel and out-of-state purchases.

The regressivity of the state sales tax has been well documented. When Rep. Steve Cohen, of Memphis, previously served in the state Senate, his research showed that fully two-thirds of Tennessee's would pay significantly less in state taxes if the state slashed the general sales tax rate from the current 7 percent rate to about 3 percent, eliminated the sales tax on groceries (it's now 5.5 percent) , and coupled the lower rate with a modest income tax, about 5 or 6 percent, on higher earners. His formula, moreover, would have resulted in a billion dollars more in state revenue.

It's understandable that citizens who haven't had the time or opportunity to look at their possible tax savings under such a reform have an emotional knee-jerk reaction to the idea of a state income tax. They are getting shafted under the present sales tax (counties can piggyback a sales tax rate of up to 2.75 percent). So they naturally mistrust the idea of coupling the state sales tax with a state income tax, even when proposed on condition of a concrete cap on sales taxes. They just don't want the Legislature to raise their taxes, so they're easy targets for Republicans' specious anti-tax rants.

It's another question, however, as to why Republican legislators, who claim to espouse a high level of family values, are not leaders in behalf of legitimate tax reform that would promote tax fairness -- and save the vast majority of Tennesseans some needed money.

It's obvious, of course, that Republicans just want to grandstand against an income tax, while they keep intact their complicit alliance with lobbyists and rich campaign donors who make out like bandits under Tennessee's current, regressive sales tax structure.

So they now stand ready to push a constitutional amendment to explicitly ban a state income tax. There's no sign on the political horizon, of course, of anyone ready to propose a state income tax.

But never mind. The House passed a bill to approve a measure last Thursday to go with the companion bill adopted last year by the state Senate. Now it must be approved by a two-thirds vote in each chamber of the next Legislature before it can be put on a statewide ballot in 2014.

Such phony grandstanding is deplorable. It's a disservice to the state and, if ultimately approved by voters, would ensure that Tennessee's fiscal structure -- and the tax burden on the vast majority of Tennesseans -- remains grossly unfair and inadequate for a long time.

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conservative said...

The purpose of a sales tax is to fund the PROPER role of government. It is a flat tax, an equal tax paid by all. It pays for such things as roads, fire and police protection, courts, libraries, and salaries of government employees. Every citizen uses, needs, and benefits from these functions of government, therefore every citizen must pay this tax equally. It has always been this way and it is fair.

January 23, 2012 at 8:52 a.m.

The idea of fairness expressed above is the creed of envious thieves. It isn't fair at all. The code word "progressive" being used to replace the word "repressive", and the code word regressive replacing the word fair. It is never fair to take something someone else has earned and give it to someone who hasn't earned it just because YOU believe they need or deserve it and the person who actually earned it doesn't. That type of action isn't and never will be fair. It is the dirtiest and lowest form of thievery. Shame! Shame! Shame!

January 23, 2012 at 10:37 a.m.
EaTn said...

I'm not in favor of freezing out a state income tax--mostly because I figure if the state right wingers are for it then it's goal is to shaft the average citizen and enhance the better to do folks. However, I ran across a lenthy( and by no means complete) list of the taxes across this great country. I think they are worthy to list:

Accounts Receivable Tax Building Permit Tax CDL license Tax Cigarette Tax Corporate Income Tax Dog License Tax Excise Taxes Federal Income Tax Federal Unemployment Tax (FUTA) Fishing License Tax Food License Tax Fuel Permit Tax Gasoline Tax (currently 44.75 cents per gallon) Gross Receipts Tax Hunting License Tax Inheritance Tax Inventory Tax IRS Interest Charges IRS Penalties (tax on top of tax) Liquor Tax Luxury Taxes Marriage License Tax Medicare Tax Personal Property Tax Property Tax Real Estate Tax Service Charge Tax Social Security Tax Road Usage Tax Recreational Vehicle Tax Sales Tax School Tax State Income Tax State Unemployment Tax (SUTA) Telephone Federal Excise Tax Telephone Federal Universal Service Fee Tax Telephone Federal, State and Local Surcharge Taxes Telephone Minimum Usage Surcharge Tax Telephone Recurring and Nonrecurring Charges Tax Telephone State and Local Tax Telephone Usage Charge Tax Utility Taxes Vehicle License Registration Tax Vehicle Sales Tax Watercraft Registration Tax Well Permit Tax Workers Compensation Tax

January 23, 2012 at 4:17 p.m.
joneses said...

I am against any new taxes that can and will be raised on the false pretense of class warfare promoted by the democrats if they ever took control of the Tennessee Legislature. Tax and spend doesnot contribute to anything but debt and eventually you run out of people to tax.

January 24, 2012 at 9:13 a.m.
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