Goals
TFT hopes to overcome the general resistance to a state income tax by showing that somewhere between two-thirds and four-fifths of all Tennessee residents would pay less tax by switching to an income-tax centered system of taxation. Their current literature suggests that the food tax could be completely repealed, the overall sales tax rate could be lowered to 5.75%, and more revenue still be generated by the state with the implementation of a modest income tax. Opponents argue that there would be no guarantee that the sales tax rates, once lowered, would not soon be raised again.
In addition to its long-term work to modernize Tennessee's tax system, TFT has also worked on other initiatives that fit within its mission. Most recently, TFT has worked to close corporate tax loopholes by enacting combined reporting for business excise tax purposes. The business excise tax in Tennessee is a tax on business profits levied at 6.5% of net earnings. Tennessee currently uses separate reporting, which means each company files a separate tax return, even if that company is just a subsidiary of a larger parent company. This makes Tennessee vulnerable to a host of tax avoidance schemes such as Delaware Holding Companies and Captive REITs. Under combined reporting rules, as is used in 22 states currently, the parent company and all its related subsidiaries file a single, unified tax return, rendering the shifting of profits between affiliates meaningless, and thereby shutting down a host of tax loopholes at once.
Read more about this topic: Tennesseans For Fair Taxation
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