NASHVILLE - A nationally known conservative economist says Tennessee lawmakers shouldn't include a tax cut on groceries as an offset to Republican Gov. Bill Haslam's proposed gas tax hike.
Arthur Laffer, who advocated "supply side" economics to slash taxes to spur economic growth during the Reagan administration, praised Haslam's proposed cuts in state corporate taxes during a House Transportation Subcommittee's meeting on Wednesday.
Those would stimulate Tennessee's economy, said Laffer who lives these days in Brentwood near Nashville.
But Laffer called the governor's idea of also lowering the 5 percent grocery tax to 4.5 percent "silly pandering... that's not helping the poor."
He also said cutting corporate taxes would encourage companies to expand, hire more people and help more people out of poverty.
In addition to cutting corporate taxes, Haslam is also recommending accelerating the previously approved Hall tax on interest and dividend income. That largely benefits wealthier Tennesseans.
Laffer's advocacy drew skepticism from Rep. John Mark Windle, D-Livingston, who favors cutting the sales tax on food and questions the governor's tax measures' benefits for ordinary Tennesseans.
"But doesn't the tax cut on food cut the tax on baby formula for a working family?" Wendell asked Laffer.
"Sure it might," Laffer said, "but it also cut the tax on my buying a steak or caviar. It does. You want to do it where it has the most economic impact."
Following the meeting, Windle rejected Laffer's argument.
"I don't represent the fat cats out in Belle Meade," Windle said of the wealthy Davidson County community. "And I'm not really concerned about their steak and caviar. I'm worried about working families making ends meet."
Since moving to Tennessee, Laffer successfully advocated abolishing Tennessee's inheritance and gift taxes and was also a critic of the Hall tax.