Press Release from Tennesseans for Fair Taxation, May 25, 2011:
Knoxville, TN (May 23, 2011): A new study has found that inverting Tennessee’s state tax structure—taxing the highest income earners at the same percentage of income the lowest income earners currently pay, and vice versa—would raise almost $14 billion in new revenue in Tennessee. The report finds all states could collectively raise $490 billion in new revenue by flipping existing tax structures, immediately eliminating states’ budget deficits and avoiding the serious consequences of budget cuts.
The report, titled “Flip It to Fix It: An Immediate, Fair Solution to State Budget Shortfalls,” was released today by Boston-based United for a Fair Economy and 13 state organizations around the country, including Tennesseans for Fair Taxation. “Flip It to Fix It” attributes a large part of Tennessee’s current deficit to its regressive tax structure that the report shows is designed to fail.
“Trying to raise adequate revenue through a tax structure where a greater percent of income is demanded of the poor than the well-off is like trying to squeeze water from a stone,” said Karen Kraut, coordinator of state tax policy at United for a Fair Economy and co-author of the report. Currently, Tennessee is one of the most regressive states in the nation with the highest sales tax and third highest sales tax on food in the nation. “To make matters worse, Tennessee legislators are trying to ban an income tax all together – that’s banning rain during a drought,” says TFT member Shirley Cecconi. “Banning an income tax guarantees that Tennessee will be essentially financially hobbled and unable to compete for years to come.”
“The tax structure in Tennessee is the classic example of ‘class warfare’ where those at or near the bottom of the income scale are paying more than three times the percentage of their income than those at the top,” said John G. Stewart, former state chair of Tennesseans for Fair Taxation. “The inadequacy of regressive tax structures puts everything we value at risk: the well-being of families, the future competitiveness of the American workforce, and the nation’s ability to rebound from the recession and prosper,” said Kraut.
The report contends that an inverted tax structure not only solves budget crises, but increases equity and best spurs steady and strong economic activity.
“This report by UFE highlights the need for revenue with justice in all states and specifically in Tennessee,” says TFT executive director Elizabeth Wright. “Tennesseans need living-wage jobs, clean air, safe neighborhoods and good schools, and Tennessee’s tax structure as it stands now cannot provide for the quality of life Tennesseans need and deserve.”
In Tennessee, the proposed amendment to constitutionally ban an income tax was deferred to the 2012 legislative session, but the bill’s sponsor, Rep. Glen Casada, has assured the public he plans to fully pursue the measure.
“It is our goal to get the word out that this measure will mean bad news for prosperity, growth and justice in Tennessee,” said Shirley Cecconi. “This report by UFE highlights that our legislators are playing politics with the economic lives of low- and middle-income Tennesseans by choosing to lock in the state’s high sales and food tax rather than asking the wealthy to pay their fair share.”
The report calls on states to adopt progressive tax reforms, many of which are immediately achievable and will help solve state deficits.
The full report and state-by-state information is now available at http://www.faireconomy.org/ flipitreport.