Are Taxes Ever Fair? Beware!
Are Taxes Ever Fair? Beware!
This year there have been numerous reports issued by various tax organizations regarding the effect of the different taxes that Tennessee taxpayers are required to pay. Some of the organizations proclaim taxes are unfair to certain groups of taxpayers and others tell us what a good deal we have in Tennessee.
For example, it was just reported in November by the Commercial Appeal that Tennesseans who earn under $17,000 pay 11.7 per cent of their income in State and local taxes while those with incomes greater than $414,000 pay only 3 percent of their income in State and local taxes. The Institute on Taxation and Economic Policy issued the report:
NASHVILLE The Tennessee tax system is the fourth most regressive among the states, with lower-income families paying a higher portion of their income in state and local taxes than do more affluent households, according to a national study released Wednesday.
When all of Tennessee’s state and local taxes are considered, the study found that Tennessee families earning less than $17,000 per year pay 11.7 percent of their income in state and local taxes, compared to 3.1 percent paid by households earning $414,000 or more, the top 1percent. Read More.
Unfair? Probably to those making less that $17,000, but not reported in the article were the number of taxpayers having incomes under $17,000 and the number of taxpayers having incomes greater than $414,000. Also, omitted were the incomes and percentage of taxes for the obvious large number of taxpayers who are between those reported incomes.
In October this year, the Chattanooga Free Times interviewed The Tax Foundation which revealed that Tennessee has the highest combined State and local sales tax in the country.
Tennessee has the highest combined state and local sales tax rate in the nation, the Tax Foundation reported today.
The average combined state and county sales tax rate in Tennessee is 9.41 percent. By comparison, the combined state and local sales tax rate averaged 7.02 percent in Georgia and 6.15 percent in Alabama.
The state of Alaska, which benefits by its tax collections from oil, gas and other natural resources, has the lowest combined sales tax rate average at 1.61 percent. Read More.
Unfair? Again probably. There has never been any doubt that Tennessee sales taxes are high.
On the other hand, in the same month the Chattanooga Free Press interviewed The Tax Foundation on where Tennessee stood in the Nation with regard to property taxes. The Foundation gave Tennessee taxpayers pretty good news. Here’s part of the story:
Property taxes in Tennessee are only about half the U.S. average . . . . Read More.
Fair? Yes, for most property taxpayers. Yet, Shelby County taxpayers don’t think so. Their property taxes are far above these levels, e.g. property taxes in Memphis are 75% more than in Nashville and 53% more than Chattanooga.
The Nashville Business Journal reported that a study by Kiplinger.com indicated that Tennessee was among the best places in the Country for retirees.
Tennessee is considered as one of the better states for retirees when it comes to taxes, according to a state-by-state analysis published by Kiplinger.com.
The Volunteer state ranks high because it has no broad-based income taxes — which means Social Security benefits, IRA distributions and pension income are not taxed. Read More.
Fair? Maybe for the retirees. But some other taxpayers complain that they have to make up the lost tax income to subsidize the costs of government enjoyed by these retirees.
In July, The Tax Foundation reported that Tennessee has a very favorable tax climate:
Tennessee’s State/Local Tax Burden Among Nation’s Lowest. During the past three decades Tennessee’s state and local tax burden has consistently ranked among the nation’s lowest. Estimated at 8.3% of income, Tennessee’s state/local tax burden percentage ranks 44th highest nationally, well below the national average of 9.7%. Read More.
This report indicates that while there may be inequities within the system, Tennessee taxes rate low in the overall tax burden. That good report covers three decades.
Fair is a word you often hear in taxes, but is rarely achieved. What is viewed by one group of taxpayers as fair is viewed as unfair by another group. There are many special interest groups seeking exemptions and the State and local tax codes are unbelievably rife with such exemptions which have been granted over the years.
Other special interest groups want to directly transfer most of the tax burden to one group.
This is where the taxpayers should beware!
The above report releases by the various tax organizations appear to be good recipe for passing the State Income tax.
Releases such as Tennessee’s taxes are among the most regressive, we have the highest sales tax rates, our property taxes are low, and that overall our tax standing is among the nation’s lowest. All those are good fuel for advocates of the State income tax.
There are special interest groups out there working diligently to achieve a State income tax, i.e. Tennesseans for Fair Taxation. Their legislative bill to achieve this is still filed in the Legislature. They seek to repeal sales tax on food and reduce the sales tax to 3%, but only after enacting a progressive State income tax.
We don’t view the income tax as the means to solving any of Tennessee’s financial problems. Perhaps it would be perceived as fair to those who would be forced to pay little or no income tax, but to most of the Tennessee’s taxpayers it would be perceived as unfair.
A State income tax would also be devastating to the taxpayers, especially in view of the economy and the expected increases in the Federal Income Tax from the Obama administration.
We have enough taxes. Yet, it seems our governments are very creative in seeking new ways to tax us more. For example in Shelby County, the politicians are now talking about a hospital bed tax to fund The Med. Read On a national level, there’s Obama’s war tax. It never ends.
However, even though there are some unfair inequities within our tax system, we have a favorable report from The Tax Foundation. Overall, our taxes are among the lowest in the Nation.
We need to keep it that way.
We also agree the sales tax should be reduced and/or eliminated on many items.
We feel that the only way to fair taxation is to reduce government expenses. Then, some of the regressive taxes could be reduced.
It can’t be done? Don’t think so?
Take a look at Representative Stacy Campfield’s list of things to do to save tax money. List
There are many other things governments could do. A couple more to start with would be to stop hiring lobbyists and quit taking expensive trips (the Governor has been to China twice in the past two years).
Governor Bredesen is struggling at the present time with what cuts could be made. However, he has so far only mentioned items that always make taxpayers uneasy to be without. Read Governor Struggles!
At the same time the Governor talks about decreases in government spending, he predicts another increase in the unemployment tax paid by employers (which we all know are eventually passed on to the consumers, us). Read Unemployment Tax Hike Unavoidable.
This increase would follow a $160 million unemployment tax increase imposed on employers just this year.
Something has to give from the government side.
Beware reports on taxes from special interest groups. Most have an agenda and it could be to get more of your money.
If you wish to email your Legislators to let them know the we should cut spending and not raise taxes or impose new ones, here is a link to a list of the Legislators. List
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