*Tennessee rankings among the 50 states

• 1st in bankruptcy (National rate = 328 per 100,00/ Tennessee = 715 per 100,000)
• 38th in Per Capita personal income (National per capita = $38,564 / Tennessee = $33,373)
• 43rd Median household income (National Median = $50,233/ Tennessee = $41,632)
• Average Annual Pay in 2007.National Average = $44, 458 Tennessee Average = $ 39, 082
  

* Morgan, Kathleen O'Leary and Morgan, Scott. CQ Press's State Fact Finder Series: State Rankings 2009. Washington, DC, 2009.

Download our PDF handout on how TFT is Good for Business.

Links to more info about taxes and job creation:

• The Big Question: Would tax breaks for the rich hurt the U.S.?
• 10 Republican Lies About the Bush Tax Cuts
• Extending Bush Tax Cuts for High-Income "Small Business" Owners Would Further Enrich the Wealthiest Taxpayers While Doing Nothing to Create Jobs
• Bush officials try to cherry-pick statistics; it’s still worst job creation record in 60 years—EPI Viewpoints
• Job Growth in U.S. Driven Entirely by Startups, According to Kauffman Foundation Study
• The latest job-creation statistics on Wisconsin may surprise you.
• Rich Americans Save Tax Cuts Instead of Spending, Moody's Says
• Job creation--tax cuts are not the right tool
• Extending High-Income Tax Cuts is the Wrong Answer for the Recovery
• Extension of High-Income Tax Cuts Would Benefit Few Small Businesses; Jobs Tax Credit Would Be Better

Tennessee currently has the highest sales tax in the nation and the 3rd highest sales tax on food — this is bad news for Tennessee business.

According to a study by the Center on Business and Economic Research at UT, Tennessee is missing out on about $300 million of potential revenue from out-of-state sales to Tennesseans. This means Tennessee businesses are losing more than $3 billion annually in sales to cross –border shopping, Internet shopping and mail-order catalog sales. In fact, over half of Tennessee’s residents live on or near a border to states with lower sales tax rates.

For instance, Fort Oglethorpe, Georgia, which is situated next to Chattanooga, Tennessee, estimates that 15 to 20 percent of their sales tax revenue “comes from Tennessee residents who shop here,” according to Ft. Oglethorpe’s city manager Paul Page. “I have to admit that I was tickled to death to find that both gubernatorial candidates up there are opposed to the income tax,” he told the Knoxville Metro Pulse in 2002.

In effect, Tennessee’s high sales tax forces Tennessee residents to seek savings elsewhere. The Internet, cross-border shopping and mail-order catalogs provide those savings, yet hurt businesses in Tennessee and hurt Tennessee residents by decreasing tax revenue for the state and cutting demand for locally produced goods.

According to the Center on Budget and Policy Priorities, “When the economy is weak, generating more demand for goods and services is what creates and preserves jobs. Retailers that face stronger demand for their products are more apt both to hire and retain employees and to maintain or increase orders from their suppliers. The initial boost in spending thus gets multiplied through the economy.”
In addition to Tennessee’s astronomical sales tax, Tennessee’s tax structure includes corporate tax loopholes that provide an unfair advantage to large multi-state companies like Toys R Us and Home Depot.

How? When Toys-R-Us, for example, turns a profit in Tennessee, it sends much of those profits to a Delaware subsidiary it created, essentially paying itself for the “rights” to use its Giraffe logo, leaving little or no income to be taxed under Tennessee’s business excise tax.

In fairness, Toys-R-Us and other large businesses are just doing what their stockholders expect them to do, making the most profit they can while staying within the letter of the law. There is a flaw in the law that allows one group to avoid paying its fair share, leaving others to pick up the tab.

That is why TFT supports an Internet Parity Act, which will improve tax revenue collections by requiring out-of-state sellers who do not collect sales tax to notify their customers at the time of purchase that they may owe sales (use) taxes to Tennessee. They will also be required to report annually to each purchaser and to the state Department of Revenue the total of use tax-eligible purchases. These measures will provide taxpayers the information they need to pay their taxes and to monitor the compliance of the vendors they patronize. Vendors may avoid the reporting requirement by collecting and remitting the sales taxes. This act will prevent out-of-state businesses from exploiting this situation to gain a price advantage over Tennessee businesses and bring in an additional $300 million in revenue for Tennessee.
In addition to helping Tennessee businesses, enhancing revenue for Tennessee is vital to all Tennesseans. According to the CBPP:

The economy is in bad shape right now because there is not enough demand for the goods and services that businesses already have the capacity to produce. To stop the destruction of jobs and begin to put people back to work, it is critical to stimulate the demand for goods and services. As this analysis has shown, one of the most effective ways to do that is to assist low- and moderate- income families, who often have difficulty paying ongoing household costs and thus are likely to spend quickly any additional income they receive. That spending preserves and ultimately creates jobs and stimulates the economy.