New Tennessee Income Tax Proposed

There’s a proposal to institute a new income tax in Tennessee, and you can read the full text of the proposed bill here.

It’s called the “Tennessee Modernization and Economic Stimulus Act”, as if by calling a tax an “economic stimulus” suddenly makes it different than simply calling it a new tax.

One of the reasons I moved to Tennessee was that there wasn’t a state income tax.  Revenues to the state are mainly via a sales tax, which is the fairest method.  Think about it. Here are a few points as to why I think the sales tax is good, and the income tax is bad.

  • If you make $200,000 per year, you’re probably buying more expensive clothes, food, cars, boats, etc. than someone making $40,000, so you’re paying a lot more in taxes.
  • With a sales tax, the more you spend on items, the more you pay in taxes.  The state currently receives 7% of a $200 restaurant bill, and 7% of a $5 McDonald’s meal.  Which one brings in more revenue?  Who is paying more?  (Hint – It ain’t the poor!)
  • A sales tax doesn’t penalize you for working more, getting a raise, or getting a better job.
  • A sales tax encourages savings/investment and paying down debt to avoid taxes – both of which are extremely good things for long term financial health.
  • An income tax forces employers to spend more more for bookkeeping and accounting.

To sum it up, I think this is a Bad Idea.  An income tax is simply a way for politicians to say they’re making “the rich” pay their fair share and to get their hands into another cookie jar.  Just say no.

gk

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