What’s Worse Than Cancer? Taxes!Posted: May 16, 2016
Two different op-eds applauding the legislature’s phased repeal of the Hall income tax popped up on The Tennessean‘s website over the weekend, overtaxing (semi-intended) the ability of headline writers to find different ways to say the same thing. One piece (“Repeal of Hall Tax Will Bolster Tennessee’s Economy“) is by Raul Lopez of a PAC called Latinos for Tennessee, the other (“Hall Tax Repeal Will Benefit Tennessee’s Economy“) is by Joe Horvath of the America Legislative Exchange Council (ALEC), the Virginia-based public policy outfit bankrolled by big business and right-wing foundations that pushes its corporatist conservative agenda in state legislatures. The Hall repeal measure awaits action from Gov. Bill Haslam — the bill hit his desk today — who has spoken approvingly of cutting the tax but isn’t so crazy about eliminating it; still, a veto seems unlikely.
Certainly there are valid grounds for quarreling with the Hall tax, which is just another cog (and a relatively small one) in the convoluted wheel that is Tennessee’s dysfunctional tax system. But the op-eds by Lopez and Horvath are quite remarkable in their combined ability to advance the most preposterous notions of the nature and role of taxes in Tennessee’s economy.
The Lopez column basically parrots the relentless illogic of the market-conservative Beacon Center of Tennessee, a free-market anti-tax outfit that longs for the libertarian paradise of a future Tennessee in which nobody pays taxes or has health insurance. Citing Beacon, Lopez acknowledges that the Hall tax revenue accounts for less than one percent of the state budget, but at the same time calls repeal “absolutely vital in order to ensure that our state remains competitive.” If it’s “absolutely vital” that we repeal a tax with such minor budgetary impact to stay competitive then we have bigger problems than just the Hall tax.
ALEC’s Horvath traffics in the same kind of trickle-down fantasy dogma, with a dose of cause-effect sophistry thrown in. He approvingly quotes Senate sponsor Mark Green’s bizarre assertion of a “lack of investment in Tennessee due to the Hall tax.” Yes I’m sure many firms are choosing not to invest here because we have a tax on investment income (like most states) that accounts for a tiny part of the state budget. Horvath applauds Tennessee’s ranking of seventh among the states in ALEC’s “economic competitive index,” which gives props to states for having low taxes and services, low wages, hostility to labor, and a tort litigation system tilted in favor of businesses over consumers and workers. Yep, we’re competitive all right.
Horvath says for states to be competitive their “crushing tax burdens” must make way for private industry. What neither of these guys mention, of course, is that Tennessee’s brand as a destination for investment is one of low and regressive taxation that punishes the poor and fails to adequately fund essential services (like education and health care). According to figures compiled by the independent Tax Foundation, our “crushing tax burden” has us ranked 45th among the states in taxes as a share of state income and 44th in tax collections per capita (47th in overall revenue/capita). We lead all states in having the highest combined state and local sales tax rates, which is what really burdens Tennesseans of limited means. And let’s not forget that for all the right-wing talk of how much we are oppressed by Washington, Tennessee is a taker not a maker: we rank 3rd among the 50 states in the percentage of state revenue that comes from federal aid. Oh, and we’re also a top 20 state in income inequality.
It’s lovely in the abstract to be (and be perceived as) a low-tax business-friendly state, but to isolate an analysis of taxes from a larger conversation about public services and social progress is ludicrous. Is it really controversial to surmise that a significant corporation contemplating investment in Tennessee is going to pay a lot less attention to the phasing out of the Hall tax than to the current and future state of our systems of education, environmental quality, and public health?
A version of this post appears on the Nashville Scene‘s Pith in the Wind blog.