Frank Cagle takes a look back at the "harm" that has befallen our state by not passing an income tax.
"The income tax bill came to the House floor and was defeated.
Surely Armageddon would ensue.
Tennessee, 10 years on, has a current budget surplus of $600 million. The Legislature this past session eliminated the inheritance tax, the gift tax, and cut the rate of the sales tax on food. This year K-12 was fully funded and funds for higher education were increased. There will be an effort next year to eliminate the Hall income tax for those over 65, and possibly eliminate it altogether.
Name another state during this bad recession that has cut taxes. Around the country, state governments are in crisis. California cities are going bankrupt. Taxes are being raised to cover budget shortfalls.
When Tennessee state government was “starved for revenue” in 2002, the state budget was $20 billion. This coming year the budget is $31 billion.
But there was a sales tax increase in 2002, and at a rate of 9.5 percent in places, it is as high as some major cities. But let’s look around. Alabama has a state income tax. The state and local sales tax rate in Birmingham and Montgomery is 10 percent. Around the country you will find combined sales tax rates of from 8.5 percent to 9.5 percent—all of them in states with a state income tax.