Monday, February 23, 2009

Stimulus Only Temporary Help for Broken System

TN Group Warns Stimulus Only Temporary Help for Broken State Tax System

Nashville, TN - Tennessee is in the same boat as many other states -- the federal stimulus money on its way to state coffers is only a temporary fix for longer-term financial woes. But will the current crisis prompt changes to the state tax system?

The group Tennesseans for Fair Taxation has coined a new slogan: "A crisis is a terrible thing to waste." State Chair John Stewart says the message is that Tennessee's tax system, which includes the highest state sales tax in the nation, is "broken." He encourages Tennesseans to recognize the problem and consider three major changes.

"Take the tax off food. We need to lower the sales tax. And, we need to have a tax on personal income, which would have very generous, front-end exemptions."

Stewart believes the biggest problem with the current state tax system is its dependence on the sales tax.

"The traditional answer of raising the sales tax no longer works, because it's already so high, you can't raise it anymore."

If these changes were made, he says, 70 percent of Tennesseans would actually pay fewer taxes, and more of the overall tax burden would shift to the wealthy. Opponents of a state income tax have said any new taxes would hurt business and could cost jobs.

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