Tennessee lawmakers have approved a new $31 billion budget that includes a modest decrease to the state’s sales tax on groceries. And by modest we mean a 0.25 percent reduction in a tax that is one of the highest in the nation.
With a maximum combined local/state sales tax of 9.75 percent, Tennessee has the highest sales tax rate in the nation. Tennessee also taxes food, something that is exempted in 33 other sales tax states.
Still, Tennessee is regarded (by some) as being a low-tax state for its absence of a state income tax. And depending on how the vote goes in 2014, we’ll never have to worry about getting one either. That’s when voters are scheduled to decide a constitutional referendum to forever forbid a state income tax in Tennessee.
A state income tax is one way lawmakers can roll back both state and local sales taxes, which are the most inequitable and plainly unfair taxes in the nation. A family in Tennessee making less than $22,000 a year pays more than three times the taxes as a portion of their income than families with higher annual incomes.
The income tax, however, is a political “bogeyman” used far too often by political opportunists to distract Tennesseans from a sensible debate on tax reform. As a result, the best Tennesseans can hope for from the General Assembly in terms of tax relief is a modest cut in the state’s sales tax on groceries.