Tennesseans For Fair Taxation - Argument

Argument

The argument advanced by TFT is a twofold one. The first point is that Tennessee governmental services are as a whole inadequate, in large part due to an inadequate tax base and the heavy dependence on one revenue source. Because of the shift to a service-based economy, exacerbated by the growth of internet sales, the sales tax has been eroded over many years. The second is that the poor pay a share of tax that is out of proportion to their income, in that most poor people consume the entire amount of their income and are hence taxed upon all of it, whereas most wealthier people invest some or much of their income, or spend it on non-taxable items like private school tuition and accounting services, and hence are not taxed on it by the state. Therefore, the argument goes, the poor are disproportionately taxed by the existing Tennessee system.

A further point made is that due to the size and shape of Tennessee, and the location of its major population centers, half of the population of the state lives within 20 miles of at least one other state and that all of the population lives no more than 65 miles from at least one other state, and that all of the surrounding states have a lower overall sales tax rate than Tennessee, meaning that many Tennesseans tend to make many purchases, especially major ones, in surrounding states, with Tennessee receiving no revenue from such transactions whatever, in essence making Tennesseans major taxpayers in surrounding states.

TFT also made the point that even many affluent Tennesseans could benefit from the fact that state income taxes are deductible from for purposes of computing liability for federal income tax, whereas sales taxes (as of 2003), were not. The Congress changed this in October 2004. However, since those who the sales tax impacts the most are the least likely to itemize, this recent change has little effect.