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October 12, 2007 - For immediate release...
Contact:
Brian Miller, TFT, 865-712-8006
New Report Documents Tax Inequality in Tennessee
This week, a new report arrived in the mailboxes of policy
makers, media outlets, and others across the state documenting
the inequity of Tennessee's tax system. "This new report
shows clearly that in every one of Tennessee's 95 counties,
the more you make, the less you pay in taxes," states
Dave McIlwaine, Board Chair of Tennesseans for Fair Taxation
(TFT). "That's just plain wrong."
"Like many Tennesseans, we have a vision of a state
where prosperity is broadly shared, the economy is strong,
and our communities are healthy. Tennessee can live up to
that vision, but to do so, we need policies that respect
the hard work of all Tennesseans, not just the fortunate
few," adds McIlwaine. "Our tax system falls woefully
short of that test, as this report from TACIR makes clear,
but the tax system can be changed."
"We are calling on legislators to take immediate
action to make our tax system more fair. It can be done."
states McIlwaine. "We're working on a plan for 2008
that will cut the state food tax again, this time paid for
by closing inexcusable corporate tax loopholes. We hope
legislators from across the state, and across the aisle,
join us in this effort as we work to create a more fair
tax system in Tennessee, a system that puts people first."
The new staff report from the Tennessee Advisory Commission
on Intergovernmental Relations (TACIR) focuses on local
taxes and only compares lower-middle to upper-middle income
families. The state's poorest and richest families are not
included in the analysis. "While the report has some
obvious limitations," states Dr. Patrick Reagan, history
professor and TFT member from Cookeville, "the fact
that it comes to the same conclusion that every other analysis
of Tennessee's tax system has come to only works to reinforce
what many Tennesseans already know; Tennessee's tax system
is unfair."
TFT points out the similarities of the TACIR report to
the findings of a more extensive examination of Tennessee's
tax system in 2003 that was conducted by the Institute on
Taxation and Economic Policy (ITEP). The ITEP report looked
at both state and local taxes, and also included all income
groups in the state, from the bottom 20% of income earners
to the top 1%. According to the ITEP analysis, low-income
families in Tennessee pay more than three times the taxes
as a portion of income than the very wealthy. Middle-income
families pay twice the taxes as the state's richest families.
"A big part of the reason our tax system is so unfair
is because of Tennessee's heavy dependence on the sales
tax, and especially the tax on food," adds Dr. Reagan.
"With the sales tax, we tax food, clothing, furniture,
cars, and other necessities. The sales tax does not however
apply to attorney's fees, real estate investments, college
tuition, private schools, or stocks and bonds. When you
look at it that way, it doesn't take long to see why lower-income
families are hit harder by the sales tax."
"Tennessee's unfair tax system helps fuel the growing
income inequality in Tennessee," adds McIlwaine, citing
a recent income inequality report from the Economic Policy
Institute (EPI). "We are the only state that made the
top 10 list of all six indicators of income inequality used
in the recent EPI report. There are some very rich people
in Tennessee, but there are also large parts of the state
where families struggle to put food on the family table,
despite working as many as two or three jobs."
TFT argues that long-term, the state needs to shift away
from sales taxes, and move toward a more balanced tax system,
including a state income tax. They acknowledge though that
under the current administration, that will likely not happen,
but they point to changes that can be made now to make our
system more fair.
"We have an opportunity right here and right now
to make our tax system more fair. We'll be working in 2008
on a new bill to close corporate tax loopholes to pay for
another cut in the food tax," concludes McIlwaine.
"That's the kind of common sense proposal Tennessee
needs."
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