Posted May 2, 2008

Tennessee tied for last place in income growth

According to data from the U.S. Commerce Department's Bureau of Economic Analysis, Tennessee is now tied with Arizona for last place in personal income growth. The Tennessean recently ran a series focused of columns on this disturbing trend. The Tennessean's editorial called for increased investments in education. Meanwhile, a guest column by Jerry Lee, president of the state AFL-CIO, called for more worker-friendly policies and protections for the rights to organize. There is a bit of truth in both of these columns.

However, the only way Tennessee will ever make real progress at educational investments, and investment in other public structures, is by addressing the underlying flaws in our tax system that are preventing those investments from being made. While Gov. Bredesen and members of the General Assembly can be commended for stating their support for these investments, and even making marginal improvements, real change will require much greater leadership than we have seen recently.

Even the $200 million in education investments made last year is a tiny drop in the bucket, compared to the real shortfall. As documented in a report TFT released in late 2006, to bring Tennessee up to the regional average in education investments alone would require an additional $2.1 billion. This is more than 10 times the amount proposed and ultimately passed last year. To achieve that level of investment would require a complete restructuring of our tax system.

While it is admirable of the Tennessean to take on this tough subject, the narrow focus on the lagging income growth overall misses an even more troubling fact: That income disparities, driven in part by highly-regressive and unfair taxes, is growing in Tennessee (Sadly, Tennessee already leads the nation in income inequality).

Click here to read about income inequality in Tennessee.