Tennessee politicians spend a fair amount of time promising voters there are no plans to reintroduce the state income tax back into the realm of serious public policy discussion.
But the cadre of activists who form the core of Tennesseans for Fair Taxation are doing everything they can to change that. And leading members of the group say that despite the chorus of pronouncements by politicians that might indicate otherwise, lawmakers typically receive income tax proponents quite warmly and respond sympathetically to their concerns, ideas and viewpoints.
“The politicians that we speak to, the elected officials and the legislators that we speak to, they get it,” TFT executive director Elizabeth Wright said during the group’s recent annual meeting at the Second Presbyterian Church on Belmont Boulevard in Nashville. “They know that the budget will never be balanced, and we will never have enough money to fund things in Tennessee without some kind of change in the way we’re doing things.”
Who TFT approaches at the Capitol about the issue, said Wright, is pretty much everybody.
“Last year we met with every single one of the 132 legislators and the members of the committees, and the department of finance,” she said. “So they are well equipped with the information about what needs to happen.”
As TFT sees it, Tennesseans pay too much in sales taxes. This is especially true of the poor, but the fact is, everybody would do better having to pay less to the government at the retail cash register, they say.
Taxes on groceries are especially pernicious, said outgoing TFT board chairman John Stewart.
Government “ought not to tax items that people are dependent upon to live,” he said. “It’s a tax on life, and that is wrong.”
Furthermore, better-off Tennesseans aren’t “paying their fair share,” said Stewart. The proposal favored by the group, SB 2054/HB 2182, would eliminate the tax on groceries, remove the local sales-tax option and reduce the statewide sales tax from 7 percent to 6.75 percent. It would also establish a graduated income tax of between 3.5 and 7.75 percent for earnings above $14,999 with “generous exemptions, such that a family of four earning $45,000 would be totally exempt,” according to TFT.
Tennesseans for Fair Taxation is backed by labor and education unions, as well as a coalition of individual citizens, universal health coverage advocates, progressive community activists, the League of Women Voters and faith-based groups with ties to Unitarian and Presbyterian congregations, Wright said.
Sympathetic organizations “are affiliated with us because they recognize that this is a core issue that cuts across all groups and issues,” she said.
That core issue, according to TFT, is the perception that Tennessee’s budget “is teetering on the edge of a cliff,” coupled with the belief that “further cuts and layoffs are not the solution.”
“Every nonprofit, every social service, every advocacy social justice group in Tennessee is affected by the fact that our state budget never has enough revenue, and programs and services are always going to be underfunded — and because this is a basic economic justice issue,” she said.
Tennessee’s combined state-and-local sales tax rate is the highest in the country and “grossly unfair and destructive” to the state’s economy and people, the group says. The answer is “to create a more fair and progressive tax structure that ensures adequate revenues for the benefit of all Tennesseans.”
“We’ve already seen college tuition rise because of lack of funding, along with state employee layoffs and drastic program cuts,” Dick Williams, chairman of both the TFT board and Tennessee Common Cause, said in a statement last week. “But this is not the worst of it — many programs and jobs were saved this year because of federal stimulus funds and the use of non-recurring funds. These options will not be available to our next governor in preparing the budget.”
That means Tennessee must consider new revenue sources “to catch up with the rest of the nation in key quality-of-life issues,” he said.
While the group “harbors no illusions” about the near-term chances of making “tax modernization,” as TFT calls their efforts, a reality in Tennessee, they anticipate that because the future bodes so poorly for the state’s fiscal position, the organization’s prospects are looking up, Stewart said.
“We don’t in any way underestimate the difficulty of what we’re proposing,” Stewart said. “But it is essential to the future of Tennessee.”
“Eventually this will become an issue that returns to the front pages, and we want to be ready when that happens,” Stewart said.
The last time an income tax was openly considered in the Tennessee Legislature was 2002. Hundreds of horn-honking motorists circled the Capitol in protest of the income-tax legislation backed by Republican Gov. Don Sundquist and then House Speaker Jimmy Naifeh, D-Covington. The proposal ultimately failed to gain enough votes to pass.