Tue
Oct 28 2014
06:33 am
John Stewart: Amendment 3 would bring higher sales, food, business taxes
By: Mike Knapp

John Stewart, of Knoxville, pens a solid op-ed in the KNS on why to vote no on Amendment 3.

Rendered in understandable English, the meaning of the words is clear: the Legislature will have authority to raise only the sales tax, businesses taxes, the tax on dividends and income, and perhaps to institute or increase state fees (state parks, for example). Some people have even raised the possibility of creating a statewide property tax.

It's hard to understate how horrible of a public finance idea Amendment 3 is. Without revenue diversification the state will have a hard time paying for critical services, infrastructure etc. They are not prone to investing anyway, hence the income tax ban, but if they are forced to for some strange reason they'll have to do it with sales tax revenue spikes and such. They'll cut and cut and cut because revenue shortfalls. Their hands are tied...

If this passes our state's public finances will rely even more heavily on the taxation of disposable income. Tennesseans who make less have their disposable income exposed to the highest sales tax in the nation. This is tax policy which at its core is exceedingly regressive on both economic and moral grounds. This is terrible budget policy of unimaginable proportions, completely unimaginative and indeed dangerous wrt vertical and horizontal equity. What's in store? Here are a few guesses: local governments and their decisions: the homeless, potholes, decreased support from the state for schools with an updated BEP shoveling 40-50 students in your kids' classrooms, infrastructure.

Finally, the other piece which comes along with decreased state and federal spending is a solid and steady decline in public employee unions. But surely that's just a coincidental, unintended consequence.

Further Reading
National Conference of State Legislators Principles of a High-Quality State Revenue System

CBPP June 2011 - Better-Than-Expected State Tax Collections Highlight Importance of Income Taxes

CBPP June 2013 - Strategies to Address the State Tax Volatility Problem Eliminating the State Income Tax Not a Solution

Institute on Taxation and Economic Policy - Who Pays? A Distributional Analysis of the Tax Systems in All 50 States

Nevin Economic Research Institute - Wealth Tax: Options for its Implementation In the Republic of Ireland

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Leland Wykoff's picture

Lottery Showed What A Gamble New Tax Authorization Is

Submitted by Leland Wykoff (not verified) on Tue, 2014/10/28 - 5:52pm.

Now they want an income tax. To be "flexible" we are told. Don't fall for it.

We were sold the Lottery on the promise it would all go to improve school funding. Lies. The state simply reduced the state funding for schools and universities from the "general fund" pot.

Taxpayers thus were tricked into reducing public funding of education. Those former school dollars were frittered away on absurd state government growth.

They robbed Peter to pay Paul.

An income tax will give them a huge new pool of tax dollars with which to play the shell game.

Do not bet an Income Tax will solve any problems. It will create new problems and corruption.

Remember the ignorance tax. The Lottery.

jmcnair's picture

What?

Submitted by jmcnair on Tue, 2014/10/28 - 8:03pm.
(in reply to Leland Wykoff)

AFAIK, there is no current initiative on an Income Tax. Amendment 3 on this ballot is the Republicans and Tea Party nuts trying to make and income tax both illegal _and_ unconstitutional. And while I agree that our lottery is a tax on ignorance, an income tax is a very different beast.

Vote no on 3 (and 1). I don't really care about the other two, but don't trust these yahoos to craft an amendment that is does what it is alleged to. Amending the state constitution is and should be very difficult.

Tamara Shepherd's picture

*

Submitted by Tamara Shepherd on Tue, 2014/10/28 - 8:32pm.
(in reply to Leland Wykoff)


We were sold the Lottery on the promise it would all go to improve school funding.

We were told no such thing.

The single biggest concern among Dems who otherwise supported the lottery was that it DID NOT do anything to boost funding for higher ed.

It simply provided for students a subsidy to help them pay a rate of tuition that was itself inadequate to cover colleges' costs.

In contrast, when Georgia had implemented a lottery just a couple of years prior to Tennessee's, that state had simultaneously allocated tax revenues to boost funding for higher ed by ten percent--primarily for infrastructure--in preparation for the anticipated influx of college freshman.

Do you not recall pix in our daily paper of students standing across the rear walls of UTK classrooms that first year, due to the university having no place to put all those new students?

Then and now, public ed at all levels needs better funding from tax reveneues.

And the smartest way to produce it is to avoid trying to extract any more blood from the turnip that is lower- and middle-income Tennesseans.

Tamara Shepherd's picture

*

Submitted by Tamara Shepherd on Tue, 2014/10/28 - 8:42pm.

Full disclosure: I served for three years with John and Nancy Stewart on the Local Organizing Committee of Tennesseans for Fair Taxation, including the years during which the General Assembly contemplated a state income tax--and failed by just four votes to enact one in 2001.

At the time, the Naifeh Plan would have boosted the total tax burden only on households earning $70K or more, which meant that it would have actually lowered the tax burden for the vast majority of Tennesseans. I can't recall what average household income ran statewide then, but it is only around $50K for Knox County now.

John and Nancy were then (and are presumably now) among Tennesseans whose tax burden would have increased had the income tax passed. However, John will look you in the eye and tell you that he knows full well there is no other state in this nation where people like him can pay so little in taxes, relative to his income. He believes he and others equally so fortunate are shirking their civic responsibility. Anyone, anywhere has to admire this man.

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