NASHVILLE, Tenn. - Tax issues were served up to Tennessee lawmakers Monday, as a Senate subcommittee took up a proposal that would change some of the state's tax structure so as to decrease the cost of food.
And a report released Monday by the organization Tennesseans for Fair Taxation (TFT) shows how such a move would benefit not only the state's bottom line, but taxpayers as well, because of federal tax breaks and lower overall taxes for those with lower incomes.
TFT executive director Elizabeth Warren explains that the proposal the state legislation has on the table would cut the state portion of the sales tax on food by two percent.
"And in order to make up for the revenue that would be lost by lowering those sales taxes that will help low and middle-income people, we would implement a graduated-rate income tax," she said.
Warren said lowering the state sales tax is also an issue of fairness for those with lower and middle incomes.
"They really are paying a higher percentage of their total personal income annually in taxes than people who make over $120,000 a year," she added.
Tennessee currently doesn't have an income tax, and there are efforts afoot to try to keep things that way. The new TFT report documents ways in which Tennessee and other no-income-tax states could better weather the recession by diversifying their tax systems.
The proposed Tax Modernization & Economic Stimulus Act (SB2054 by Sen. Reginald Tate & HB2182 by Rep. Larry Turner) is at wapp.capitol.tn.gov