Tax Commission Says Yes to Tax Reform!
After over two years of hearings, testimony, and deliberation,
the Tax Structure Study Commission, originally formed in 2002 to study
the state's tax system and make recommended changes, voted today on its
final recommendation to be submitted to the General Assembly in the coming
weeks.
The basic findings of the Commission substantiate what TFT
has been saying for years – that the sales
tax is too high, that it forces
low-income families to shoulder an unfair burden, and it hurts Tennessee businesses. All of these findings just go to prove
that if you sit and look at the problem for long enough as the Commission
members did, the facts will start speaking for themselves.
In the end, the plan recommended by the Commission is a
very positive step forward. It creates a much more equitable tax system
for working families and in the process, lowers taxes for 4 out of 5 Tennesseans!
While the plan makes significant headway on tax equity,
it raises no new revenue and thus does nothing to lift Tennessee up from the bottom of the national rankings.
The second major shortcoming of the plan is that is does not completely
repeal the food tax. Both of these however are things that can addressed
as the recommendation moves forward.
In short, the Commission's recommendation represents a very
positive step forward for Tennessee and Tennesseans. Specific elements
of the Commission's recommendation include:
- Lower the sales tax on non-food items by more than a
third to one unified state-local rate of 6% (currently varies from county-to-county
with a 9.75% max).
- Cut the food tax in half to one unified rate of 4% (currently,
it varies with a 8.75% max rate).
- Establish a graduated income tax with generous front-end
deductions of $15K for single filers and $30K for couples. The rates
go from 3.5% to 6% with four tiers and married families not hitting
the top bracket until they make at least $100,000 a year. This new income
tax would replace the current Hall Income Tax that only applies to limited
types of income.
Generally speaking, all three of these are elements of tax
reform that TFT has long advocated for and would make our current tax
system much more equitable. In addition, the recommendation includes lowering
certain business taxes, establishing an independent review system, and
other changes.
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