NASHVILLE – A former Reagan administration economic adviser’s “steak and caviar” argument against cutting Tennessee’s sales tax on groceries to offset Republican Gov. Bill Haslam’s proposed gas tax hike is proving to be one thing some lawmakers can’t swallow.
Economist Arthur Laffer, whose famous “Laffer Curve” inspired Ronald Reagan’s tax cuts aimed at fueling economic growth, described as “silly pandering” Haslam’s proposal to cut the state’s 5 percent sales tax on groceries by a half percentage point.
It won’t help the poor, Laffer argued before a House committee this week. Cutting corporate taxes would, he said, because it would serve as a greater spur to Tennessee economic growth and job expansion.
Haslam has already included a reduction in business franchise and excise taxes, primarily for manufacturers, in his package of tax cuts.
During his presentation, Laffer said he saw little problem with Haslam’s gas tax proposal itself so long as equal or more cuts are made in business taxes that fund non-highway areas of state government.