Tennessee tax breaks and racism

Tennessee tax breaks and racism

March 27th, 2012 in Opinion Times

The Tennessee Legislature's Republican bent to favor the wealthy and appease racists has rarely been so obvious. Consider the Legislature's actions last week on two specific bills -- one to dismantle the inheritance tax on estates of more than $1 million, the other to block the merger and integration of Memphis City and Shelby County school districts.

Helping Tennessee's most affluent residents by phasing out the state's inheritance tax was originally proposed by Gov. Bill Haslam, but Republic lawmakers seem equally eager to please the well-heeled crowd -- no doubt, in part, because that's where the bulk of their campaign donations originate.

Eager-beaver lawmakers

Haslam has proposed to terminate the high-end inheritance tax over five years beginning in 2013, with each incremental step being paralleled by minuscule deductions in the state's sales tax on food. Eager-beaver lawmakers in the House last week accelerated the phase-out schedule to four years, which at that point would mean the complete loss of a state funding source that now amounts to $90 million a year.

This is malevolently misguided. The state's inheritance tax begins on estates of $1 million, but the bulk of its inheritance tax revenue comes from far larger estates valued in the multi-millions of dollars. The cut would certainly boost the fortunes of Gov. Haslam's family, whose ownership of the Pilot Oil empire is worth billions of dollars.

Regressive taxation

In a state that relies more heavily than any other state on sales taxes -- the most regressive form of taxation -- this gratuitous tax break for the wealthy and the super-rich would simply add insult to injury. The less that average Tennesseans earn, the higher the proportion of their income that goes to state sales taxes. The regressive nature of the state's tax system in a state classified as a low-wage state is already stunning. In a state that levies no general income tax, taking away the inheritance tax on high-income families makes Tennessee's tax structure even more regressive.

The inheritance tax should not be eliminated. Revenue from it should be channeled, for example, to keep the Taft juvenile center open, and to restore cuts in services for the intellectually challenged, and in TennCare.

A significant portion of Tennessee's lawmakers care as little for racial equity as for tax fairness. When the predominantly black Memphis city school district began moving two years ago to voluntarily dissolve its school district into the richer Shelby County school district by 2013, Shelby County's legislators got the Legislature to consider a bill to dissolve the state's long-standing ban on new municipal school districts. Never mind that the ban was established years ago to promote racial equity by curtailing fragmentation of integrated countywide school systems.

Bill is stalled

The bill would have let Shelby County racists in the small towns of Arlington, Bartlett, Collierville, Germantown and Lakeland put a referendum on the May 10 ballot to create their own municipal school systems before the Memphis/Shelby school merger. Fortunately, the bill was stalled last week by two events. First, the state attorney general ruled the bill would be illegal before the Shelby County-Memphis school merger occurs. Second was former House Speaker Jimmy Naifeh's impassioned plea to stop a bill clearly designed to maintain racial segregation in Memphis-area schools.

Both bills are now awaiting other committee hearings. Transparency and soul-searching in the cause of tax equity and racial fairness should prompt their demise.