State income tax ban faces hurdles
Posted: Friday, June 3, 2011 8:01 pm
By: Laura Thornquist, Special to The Press
A permanent ban on a state income tax is marching closer to reality in Tennessee, but many hurdles remain to amending the state Constitution, and the debate continues.
Tennessee, which pays many of its bills by charging a sales tax, has no state income tax with the exception of the Hall Income Tax, which targets investment income.
Supporters of a permanent income-tax ban say it would keep the state attractive to businesses and create jobs, but opponents say it also creates a burden for residents, guaranteeing higher sales taxes on items such as groceries.
Brian Zralek, a member of Tennesseans for Fair Taxation, predicts a tax ban would make life more difficult for blue-collar workers.
“We just don’t have tax justice in our state, and what we end up with is the rich getting richer and the poor staying poorer.”
Zralek says the bill ties the hands of future legislators. Banning an income tax, he says, means that in future years, the state could not afford for lawmakers to cut the retail sales tax or food tax. He says that puts an additional burden on those already struggling to put food on the table.
“The facts are that a higher proportion of the income of lower-income people goes towards paying taxes than it does with higher income, due to the discrepancy and due to the unfair tax system that we have in this state.”
Most of the tax burden falls on those at the bottom of the pay scale, Tennesseeans for Fair Taxation charges, accounting for 11 percent of their incomes, while those with the most money pay only 1 to 2 percent of their income in taxes. Since the ban requires a constitutional amendment, it will also need a vote from both houses in next year’s General Assembly. If passed, it then would go before voters in 2014.
State income tax, Tennessee