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Dig Deeper: Why did Governor Sundquist want to pass an income tax?
Tennessee is one of only nine states that do not have a state income tax. Most of the other states like Alaska (oil), Texas (oil), Nevada (gambling), and Florida (oil), have substantial revenues from other sources. Tennessee does not.
Most of the Tennessee state revenue comes from the sales tax and a tax on investments from stocks and bonds. Sales taxes are a tax charged when an item is purchased and then passed on by the vendor to the government.
It is usually considered a regressive tax since lower income consumers pay the same percentage as rich ones—unlike income taxes which charge lower tax rates to lower income taxpayers.
Sales tax revenues also tend to go down faster in economic bad times, although income taxes are also affected when people lose their jobs.
It is usually considered a regressive tax since lower income consumers pay the same percentage as rich ones—unlike income taxes which charge lower tax rates to lower income taxpayers.
Sales tax revenues also tend to go down faster in economic bad times, although income taxes are also affected when people lose their jobs.
Sundquist’s tax proposal would have lowered sales taxes while instituting an income tax, making the state taxes less regressive. It also would have made revenues more stable, making it easier to balance the state budget every year. Opposition to the tax, however, killed the bill.
Picture Credits:
- Tennessee state troopers with riot gear stand guard at the State Capitol during the income tax debate in the summer of 2000. One of the income tax protesters raises his hands in victory after the proposal was defeated in the House of Representatives. Photo by Eric Parsons, courtesy of The Tennessean
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