Tennessee Gov. Haslam tax plan spurs debate: Baby formula, caviar and 'fat cats'

Gov. Bill Haslam gives his annual State of the State address to a joint convention of the Tennessee General, Assembly Monday, Jan. 30, 2017, in Nashville, Tenn. (AP Photo/Mark Humphrey)

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.