Fri
Jan 13 2012
12:59 am
Governor Haslam hands out three-dollar bills
By: EricLykins

Well, almost.

The governor's call for reducing the state's sales tax on groceries from 5.5 percent to 5.3 percent would cause a loss in about $18 million in annual state revenues - or an average of about $2.84 annual savings per Tennessee resident. Haslam said he wants to reduce that tax to 5 percent in the next three years.

He also wants to raise the inheritance tax exemption from $1 million to five.

Topics:
bizgrrl's picture

Wants to reduce the tax on

Submitted by bizgrrl on Fri, 2012/01/13 - 5:51am.

Wants to reduce the tax on groceries by 0.5% in 3 years. Such a bold move. What a joke.

WhitesCreek's picture

I believe that will someday

Submitted by WhitesCreek on Fri, 2012/01/13 - 8:27am.

I believe that will someday save the Governor and his siblings about $360,000 each.

EricLykins's picture

That's 120,000 three-dollar

Submitted by EricLykins on Fri, 2012/01/13 - 10:21am.

That's 120,000 three-dollar bills.

Tamara Shepherd's picture

*

Submitted by Tamara Shepherd on Fri, 2012/01/13 - 10:23am.

n X .02 = $2.84?

If my eighth grade algebra doesn't fail me, then n / .02 = $2.84 / .02.

So n = $142.00, the amount of annual state sales tax each of us is presumed to spend on groceries?

Given the current 5 1/2 % state sales tax rate on groceries, then, $142.00 / .055 = $2,581.00, the amount of annual grocery purchases each of us is presumed to make?

But my family of four doesn't (and can't) spend $10,327.24 per year, which is $860.60 per month, at the grocery store.

We spend around $600.00 per month, or about 70% of that amount. Our per person annual savings on sales tax therefore wouldn't amount to $2.84 each, either. Our per person annual savings would run about 70% of that, or just around $1.98 each.

Darn it. I was hoping maybe we could all go out for a Happy Meal...

Andy Axel's picture

Working in round numbers,

Submitted by Andy Axel on Fri, 2012/01/13 - 11:37am.

Working in round numbers, it's $0.50 back on every $100 spent. That's money that only matters in aggregate, which means it looks like it costs the state a lot, but it affords very little to the consumer.

The laugh is that Haslam will use this (assuming it passes) as a statement that he "reduced the food sales tax burden on the working families of Tennessee by $18M a year."

Keep the change, Governor Baby.

mrvlknxor's picture

Errors in previous calculations

Submitted by mrvlknxor on Fri, 2012/01/13 - 3:51pm.

Both calculations given here are incorrect.

First, the governor's calculation of $2.84 tax savings is based on an annual grocery expenditure per person of $1420. Going from .055 to .053 tax is savings of .002 per $1 (or 20 cents per $100). Therefore .002 x 1420 = $2.84 savings per person.

This would approximate a family of four spending about $5680 for groceries which agrees with Tamara's estimate for her family. The total tax savings of $18 million / 2.84 per person = 6,338,000 people which is very close to 2010 Tennessee population.
.

Stick's picture

Greg Johnson - Public Intellectual

Submitted by Stick on Fri, 2012/01/13 - 10:30am.

Don't worry. Greg's here to tell you how great it is! It's just a matter of time before we return to the good old days that good Christian conservatives long for...

rikki's picture

bite me

Submitted by rikki on Fri, 2012/01/13 - 11:09am.

Does anyone know whether the grocery tax would apply if Governor Haslam bit my ass?

How did he even arrive at this decision? Is the purpose to entertain his PR staff? Is there some "I am the 1%" joke figured in to this calculation we haven't noticed? Is there some lobbying group that likes having a tax on groceries that talked him down from a more substantial cut?

There are all sorts of food-tax reform ideas floating around that could be used to ease the burden on the poor, reward healthy habits, support Tennessee agriculture and come away with little or no impact on state revenues. Instead, we get a cheap stunt.

Andy Axel's picture

While the "graduated" state

Submitted by Andy Axel on Fri, 2012/01/13 - 2:38pm.

While the "graduated" state income tax in Kentucky is a bit of a farce*, a person making any amount of money in Kentucky pays an additional $0 on food items. The working poor still subsidize this in a lot of ways, but at least there is no tax on food purchases.

Which is why any time I'm in Hopkinsville, which is honestly quite often, the local Kroger gets a lot of my stock-up business.

Taking the 5.5% state tax on food to 0% would be fundamental reform. This is just fiddling.

* Kentucky residents making between $8K and $75K a year pay 5.8% in state income tax and those making over $75K pay 6% -- that is, of course, before claiming that payout against gross income as an itemized deduction on the Schedule A. Really Kentucky? There's 0.2% difference in burden between an hourly income of $4.00 and an hourly income of $40.00?

rikki's picture

.2% for the 1%

Submitted by rikki on Fri, 2012/01/13 - 5:59pm.

Hell, taking the 5.5% to 2% would be fundamental reform. Better yet, you could drop it to zero on milk, meat, produce, etc and keep it at 5.5% on packaged, processed foods. Any tax that makes wasteful packaging costly will justify itself many times over in reduced landfill costs, better nutrition, boosts to local farmers and more.

A change on Haslam's scale is virtually invisible to the consumer economy, which is probably why he likes it. The only people who will actually notice the difference will be retailers who sell food. It's the classic steal-the-rounding-error heist, unnoticeable at the transaction level, but aggregating across big operations.

Pam Strickland's picture

I like this idea.

Submitted by Pam Strickland on Sat, 2012/01/14 - 1:02am.

I like this idea.

michael kaplan's picture

not sure, but i believe basic

Submitted by michael kaplan on Sat, 2012/01/14 - 11:32am.

not sure, but i believe basic foods in some countries not only have zero tax, but are actually subsidized to be available at lower than cost. i suppose food stamps provide that kind of subsidy here ...

michael kaplan's picture

Five bucks

Submitted by michael kaplan on Fri, 2012/01/13 - 2:24pm.

$3 plus the $2 Bob Becker saved his constituents annually by selling the Candy Factory = $5

Min's picture

I've said it before, and I'll say it again.

Submitted by Min on Fri, 2012/01/13 - 3:28pm.

This is what you get when you elect a rich man who didn't earn his money.

Andy Axel's picture

And often when you elect a rich man regardless

Submitted by Andy Axel on Fri, 2012/01/13 - 4:21pm.

Depends on the definition of earned money, I suppose.

Haslam's immediate predecessor is a rich man whose vast wealth was arguably earned, even if much of it was made by "managing" (read: denying) care to the participants in the HMOs he created. Hell, he could have used his much-vaunted popularity to enact and garner support for the sorts of reforms that would be both rational and fair, even if it meant going back on a campaign promise. Isn't that what lame duck terms are for?

But no, we have a different legacy playing out now.

cafkia's picture

Now yall aren't being fair.

Submitted by cafkia on Fri, 2012/01/13 - 5:41pm.

Now yall aren't being fair. You know that Bill has to protect his bona fides and such until his 2nd term as POTUS. Then he can do all the good that is his nature to do.

Up Goose Creek's picture

WIC foods

Submitted by Up Goose Creek on Sat, 2012/01/14 - 2:59pm.

WIC foods seem to be higher in nutritional value than the typical processed fare. Why not eliminate the sales tax on these items for everyone? The database is already in place.

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