Published: Thursday, January 31, 2013 11:29 AM CST
It’s hardly new information, but it bears repeating from time to time to make sure we don’t forget: Tennessee’s tax system punishes the poor.
When taxes are calculated as a percentage of income, low-income families in this state pay four times as much as the very wealthy. That’s according to a study by the Washington-based Institute on Taxation and Economic Policy.
The institute lobbies for a state income tax, which means its position hasn’t a ghost of a chance of being approved by our state legislature. But if tilting at windmills may be futile, it still is the right thing to do. We need to be reminded from time to time that our tax system is unfair.
Burden is unfair, study finds
Tennessee takes great pride in being a “low-tax” state. By that we mean that the absence of a personal income tax and other positions make our business climate attractive to investors.
But “low tax” is a loaded term. We actually have one of the highest sales tax rates in the country. The institute ranks us in its “terrible ten” group — along with Florida, Texas, Pennsylvania and others — for placing a heavier burden on families making less than $17,000 a year.
The poor pay more than others in this state because most of their spending is for items subject to the sales tax.
What can we do, since we’re obviously not going the income tax route?
Gov. Bill Haslam, in his State of the State address Monday, said our low-tax status has made our economic recovery more striking than those of most states. But he also called for a quarter-percent cut in the state sales tax on food, to 5 percent. He helped push through a similar reduction last year.
Tennessee is not alone in taxing the poor more. Across the nation, state and local governments tend to tax the poor twice as much as the rich, in terms of percentage of income paid in taxes.
There’s not much chance that we’ll make a serious change in the current situation, but we shouldn’t feel comfortable about it.