On Saturday, April 10, two weeks into the Special Session, Shelby County legislators held a public forum in Memphis to give citizens an opportunity to voice there options on the tax debate.  Upon hearing about the forum, TFT and other tax reform supporters began spreading the word.  That work paid off when about 75 supporters showed up at the hearing.

Support for tax justice was overwhelming at the hearing.  At one point during the public forum, Sen. Kyle asked who in the room would support an income tax if it were tied the elimination of the tax on food - nearly every hand went up.  When he asked who would oppose it - only one hand went up.

Several groups were represented at the hearing including TFT, the Mid-South Center for Peace and Justice, Ten. State Employees Assoc., the NAACP, and others.  Many wore the TFT badge that red "Fair Taxes NOT Food Taxes.

Before the public testimony was given, Dr. Bill Fox, from the UT School of Business, gave an overview of the structural budget deficit.  Because Tennessee,s tax system is so dependent upon the sales tax, the state revenue grows at a much lower rate than the economy.  As a result, the state must raise the tax rate every couple of years to keep up with economic growth.

Two major factors are causing the erosion of the sales tax base.  As the country moves toward a service economy, more and more of people,s incomes are spent in the services rather than tangible goods.  Since a sales tax is a tax on tangible goods, that means less revenue for the state as time goes on.

As well, more and more frequently people are buying their goods over the internet or mail-order, thus avoiding the sales tax.  Both of these factors are realities that will become more important as we move into the 21st century rendering the sales tax ineffective.

According to economic studies, for every dollar in economic growth, Tennessee state revenue grows somewhere between 75 and 80 cents.  In most neighboring states that do have an income tax as part of a diverse tax base, that rate of growth is dollar for dollar.  The only way Tennessee can address this structural deficit is through restructuring its outdated tax system, including the institution of a state income tax.