Gubernatorial hopefuls stand united against tax increase

Gubernatorial hopefuls stand united against tax increase

July 11th, 2010 by Andy Sher in Politics

NASHVILLE - Tennessee's four major gubernatorial candidates say they are weighing tax cuts in areas ranging from the inheritance tax to assessments on small business.

While tough economic times have forced Gov. Phil Bredesen to slash state spending by 25 percent in recent years, Republicans Bill Haslam, Ron Ramsey and Zach Wamp, as well as Democrat Mike McWherter, show no appetite for raising taxes to cover that.

U.S. Rep. Wamp, R-Tenn., and Lt. Gov. Ramsey, R-Blountville, pledged they will not increase taxes if elected.

"I do not intend to raise any state taxes," Rep. Wamp said. "We must first reform and right-size state government and grow our state economy, not raise taxes."

Knoxville Mayor Haslam said he is "committed to getting our state through its current budget challenges by prioritizing, cutting and restructuring state government." He said taxes are "job killers."

Jackson, Tenn., businessman McWherter said that "on principle, I oppose any tax increases." He said he does "not sign or make any pledges on any issue, instead taking the approach to be candid and forthright about my position on matters as they arise."

Stances taken by the candidates on tax issues came in written responses to a survey on tax issues posed by the Tennessee Newspaper Network in advance of the Aug. 5 state primary election. The TNN is a content-sharing coalition that includes the Chattanooga Times Free Press and newspapers in Memphis, Nashville and Knoxville.

Early voting for the Aug. 5 elections begins Friday.

All four gubernatorial candidates have said they would oppose passing a general state income tax. In the survey, they also nixed any talk about increasing the state's 7 percent sales tax or any extension of sales taxes to new items such as chicken feed or services such as legal fees.

"I will not increase the sales tax as governor," Mr. Haslam said. "We already have the highest combined state and average local rate in the nation. Tennessee families and businesses have been forced to cut back during this recession, and state government must do the same."

The sales tax is the state's main revenue source, accounting for 55 cents of each state tax dollar.

Other taxes

All three Republican candidates say that, when economic conditions improve, they also would consider cutting or eliminating the state's existing 6 percent Hall income tax on interest, notes and stock dividends and the inheritance tax.

"I am for repeal of the inheritance tax," Lt. Gov. Ramsey said. "It's not right that an individual works hard his or her whole life to create something of worth - a legacy - only to have it taken away by government upon death."

Calling the Hall income tax "clearly burdensome" for retirees, other seniors, investors and others, Rep. Wamp said, "We should move to eliminate the Hall income tax as soon as we see daylight in the state budget."

According to Mr. McWherter, he is the "only candidate in this race that supports a tax break for Tennessee small businesses that are creating new jobs."

The state has a 6.5 percent excise tax on a business's income and a 0.25 percent franchise tax on a business's property value.

Democrat dissents

Mr. McWherter took issue with cutting the Hall income tax or inheritance tax any time soon, saying they "affect a small percentage of wealthy taxpayers" and "would not benefit the average Tennessee family."

The state collected about $222 million from the Hall income tax in the last fiscal year, according to the Revenue Department. Two-thirds of it goes to local governments.


* Friday-July 31: Early voting for the county general election.

* Aug. 5: County general election and state race primaries.

Meanwhile, neither Lt. Gov. Ramsey nor Rep. Wamp is ruling out changes to funding for Tennessee roads. The state's $1.8 billion Transportation Department budget has been hit by shrinking revenues and federal cuts in recent years. About $886 million of the department's budget comes from state sources, and the remainder comes from the federal government.

Transportation is funded by a 21.4 cent-per-gallon gas tax and 18.4 cent tax per gallon of diesel. Neither has been increased since 1989.

Lt. Gov. Ramsey said governors have "raided" the state road fund in recent years of more than $260 million. The money "should be fully restored before we have a conversation about new revenue," he said.

He said the problem with the current funding system is the fuel taxes don't take into account higher federal mileage standards for vehicles as well as hybrid or electric cars.

"In the long term, the current funding mechanism simply won't work," Mr. Ramsey said.