June 23, 2009

We Did It! Thanks to the Generous Support of Donors Across Tennessee, We Met the Babcock Challenge... Now What?

Last year, the Mary Reynolds Babcock Foundation gave TFT a challenge. They would match every dollar we raised from individuals over and above what we raised from individuals the previous year... up to a maximum of $25,000. In short, all new and increased donations are being matched dollar-for-dollar this year.

Since we raised $40,000 from individual donors during the last budget year (July '07 to June '08), we set a goal of raising $65,000 from individuals this year (July '08 to June '09) so we can get the full $25,000 challenge grant from Babcock. As of today, we have raised $66,256, beating the $65,000 goal with six days to spare! TFT extends our thanks to all the donors across the state who made this success possible.

So now what? The Mary Reynolds Babcock Foundation is doing it again for our next budget year beginning July 1, 2009, but they are upping the ante. They will match dollar-for-dollar all new and increased gifts over the $65,000 goal from this year. That means, we'll be aiming to raise $90,000 in individual donations in the next budget year (July '09 to June '10) to leverage the full $25,000 matching grant from Babcock. This is the kind of growth TFT needs to take seriously so we can be prepared to face the challenges of the coming years, as the stimulus runs out and pressure for new revenue mounts.

If you are one of those who gave this year, your continued support will help us meet the Babcock Challenge in the coming year. If you did not give to TFT recently, your new or renewed support will go a long way toward helping TFT meet the Babcock challenge and build the kind of organization that can challenge political inertia and bring about real change.

Thank you!

February 27, 2009

Tax Modernization Plan Filed for 2009-2010 Session

This session, the Tax Modernization and Economic Stimulus Act (SB2054 / HB2182) was filed, renewing the dialogue about the kind of reform Tennessee truly needs to move forward. This new bill, which is supported by Tennesseans for Fair Taxation (TFT), would completely repeal the state and local sales tax on grocery food, reduce the overall sales tax on all other items by 3%, and enact a progressive state income tax that would replace the current, more limited Hall income tax.

Animated graph hard to read? Download the PDF handout of the Tax Modernization Act with before and after graphs that don't move.

Tax Modernization is one of at least five bills TFT is supporting as part of our 2009 legislative agenda. Click here for a full list of bills being supported by TFT.

December 17, 2008

New Video: Food for the Holidays

As the state faces record budget shortfalls and families struggle amidst the worst economic downturn in decades, TFT has released a new video on YouTube about the role Tennessee's high food tax plays in making matters worse on both fronts.

1. The high food tax in Tennessee takes 28 days worth of groceries from every family each year. Repealing the food tax would be like getting an extra month's worth of groceries each year... enough food to last from Thanksgiving to Christmas.
2. At the same time, the high food tax drives shoppers into neighboring states, resulting in significant loss of sales tax revenue across our state lines. Now more than ever, as our budget shortfall approaches $1 billion, we cannot afford such an inefficient and uncompetitive tax system.

There is a better way to fund state services than with such a high food tax, whether closing corporate tax loopholes or enacting comprehensive tax modernization. With real leadership, legislators could both reduce the food tax while also raising hundreds of millions to help stave off the proposed budget cuts.

November 13, 2008

State budget shortfall could hit $800M

The magnitude of the shortfall facing our state is now likely to rival the shortfalls the state faced in 2001 and 2002. The latest estimates place the budget shortfall for the current year in the $800 million range. The shortfall for September alone was $80 million. This means that when legislators come back in 2009, they will have to retroactively deal with the current-year budget, even though by then it will be more than half-way over. This on top of grappling with the budget for 2009-2010.

Budget cuts will have negative impact on already under-funded public structures

Gov. Bredesen is still stating his intentions are to address it by using the state's rainy day fund, coupled with additional budget cuts. That means more cuts on top of the budget cuts already implemented to a host of public services over the last few years. Click here for the full Tennessean story.

While the Governor and the new General Assembly will likely want to keep the discussion focused on how we can cut our way out of the shortfall, TFT and our many allies will be looking at more productive ways to deal with the challenges facing Tennessee.

One possibility is the closing of corporate tax loopholes by enacting combined reporting. Other business tax loopholes could be closed as well. This approach would add fairness to our tax system by putting small businesses that don't benefit from such loopholes on a more level playing field with their big box competitors. It will also help raise needed funds, but even the best case scenario of $250 million from enacting combined reporting is only part of the solution when the shortfall starts to approach one billion.

Other changes "around the edges" could help ease the shortfall. Ending some unjustified exemptions in the sales tax or rolling back the sales tax break for big ticket items are certainly steps in the right direction. Again though, these fixes have limited revenue potential and would only cover part of the shortfall.

Any of the above solutions, coupled with use of the rainy day fund, could together be used to bring the budget shortfall under control during the coming year. But if the budget shortfalls roll into next year and the year after that, then the options will begin to narrow for policy makers. At that point, the prospects of a comprehensive restructuring of the tax system, including a state income tax coupled with reduction of the sales tax and repeal of the food tax, will clearly grow.

October 15, 2008

Jackson outreach efforts underway

Last month, TFT hired our new West Tennessee Organizer, Ebony Williamson, and opened our office in Jackson. It didn't take long for the outreach work to begin with the TFT booth at the Jackson Save Our Community Day event sponsored by long-time coalition member, SOCM. Joining Ebony at the outreach and education booth were supporters from the Jackson area, Martha White, Harrell Carter, and Bobby Jan Torre.

While TFT will continue to push for short-term wins like reducing the food tax and closing corporate tax loopholes in the current legislative session, our outreach and education efforts are aimed at building support for our long-term objectives of comprehensive tax reform and the broad principles of progressive taxation.

In light of the mounting budget shortfall, TFT is currently in the process of ramping up all of our education and outreach efforts across the state. If you would like to help set up a booth at a local community event, or if you would like to schedule a workshop for your local church group or neighborhood association, call 888-671-5188. We'll be glad to help!

May 24, 2008

Study resolution passes with unanimous vote

When TFT initiated the campaign to close corporate tax loopholes as part of the Food & Business Tax Fairness Act, we understood that it would likely be a two to three year initiative. During the 2008 legislative session, the first year of the two to three year initiative, we made progress in educating lawmakers, building public support, identifying small business allies, and gaining valuable media coverage.

A the core of the initiative is a shift to combined reporting for business tax purposes. Combined reporting is an accounting method already used by 21 states representing over half the US economy. It requires businesses with multiple subsidiaries to file a single, unified tax return for the parent company and all its affiliates. In the process, it shuts the door to a wide array of corporate tax avoidance strategies with one simple, common sense change in reporting. Corporations can still shift profits back and forth between their various subsidiaries, but there is no long a tax advantage in doing so under combined reporting.

Based on revenue estimates from 11 other states, we know that combined reporting could potentially recover between $110 million and $250 million currently being lost through tax loopholes. Unfortunately, the officials at the Department of Revenue failed to provide meaningful and justifiable data. As a result, TFT and our legislative allies refocused the strategy in the final weeks to create a study under the direction of the Comptroller of the Treasury.

This study, which passed in the final days by unanimous vote in both chambers, will look a the feasibility and revenue impact of adopting combined reporting rules. The final report is due in December. This will provide TFT with the necessary information to come back again with another push in the 2009 legislative session.

Thanks to all who helped make this victory possible! It's one more step on the road to tax fairness in Tennessee. Click here to learn more about the Food & Business Tax Fairness Campaign.

Did you know?

• Tennessee has the nation's highest average sales tax at nearly 10%.
• Tennessee is one of only a handful of states that still tax groceries.
• Tennessee has more border states than any other state in the nation.
• Over half of Tennessee residents live in counties bordering another state.
• Every single state bordering Tennessee has a lower sales tax.
• Every day people drive across the border or go on-line to avoid the sales tax.
• Tennessee’s high sales tax costs the state tens-of-thousands of jobs.