Friday, March 27, 2009

Tax Plan Proposed for TN Budget Deficit

TFT Introduces a Tax Package that Provides Tax Cuts and Reduces the Budget Deficit
Tennesseans for Fair Taxation (TFT) is supporting a package of legislation designed to increase available state revenue, as the state faces a $1 billion deficit, while also providing much-needed tax reductions for most Tennesseans, and strengthening local businesses that employ people in our state.

"In times like these we simply cannot stand aside and let Tennessee citizens be penalized by a tax system that is deeply flawed, extraordinarily unfair, and incapable of delivering the benefits our citizens have every right to expect," said John G. Stewart, TFT State Chair.

"We applaud the legislators who have stepped forward with concrete proposals to fix our tax system. While each of these five proposals will draw a different set of supporters, taken together, they will move Tennessee forward by closing loopholes that benefit only a favored few, strengthen businesses that employ people here in Tennessee, reduce taxes for those hardest hit by the economic downturn, and raise much-needed funds to invest in Tennessee and avoid unnecessary budget cuts." "In assessing these various bills, Tennesseans need to look at the facts," Stewart said. "Some Tennesseans need to stop shouting, take a deep breath, exhale slowly, and take the time to figure out what these bills really do, not just take the word of someone else."

"Tennesseans also need to face the most fundamental fact of all: like it or not, and I know of no one who likes it, the General Assembly, in order to meet its constitutional obligation to balance the State budget, will have to enact some kind of tax increase once the Federal fiscal stimulus runs its course."

"So the issue is not whether there will be a tax increase, the issue is what kind of increase it will be. These bills, taken together, provide the best deal for the overwhelming majority of Tennesseans-by increasing revenue, providing important tax cuts, and equalizing the tax burden across all income levels," Stewart said.

"Not every legislator will support every one of these bills. Some will support a few of the bills, but not others. But when legislators are contemplating deep cuts to higher education, public health, environment, and other public responsibilities vital to a strong economy, these bills provide real and far better alternatives," states Stewart. The five bills supported by TFT include:

1. - The Food & Business Tax Fairness Act of 2009, sponsored by Sen. Tim Burchett (SB 0502) and Rep. Charles Sargent(HB 1350). This legislation stops the practice of multi-state corporations shifting their profits to out-of-state subsidiaries to avoid paying Tennessee's business taxes that smaller, locally-owned businesses must pay. Toys-R-Us for example pays its own subsidiary in Delaware for the rights to use its corporate logo and trademark giraffe. While these are really the same company, such shell games mean that taxable profits in Tennessee can be greatly reduced or zeroed out on paper.

The Multi-State Tax Commission, an interstate agency, estimated that in 2001 alone, Tennessee lost between 14% and 32% of taxable revenue to these sheltering schemes. The Center on Budget and Policy Priorities in Washington, DC, has estimated that Tennessee would recover $110 million to $250 million by requiring 'combined reporting' of corporate profits.

This legislation would close these loopholes by enacting 'combined reporting' as 22 other states have already done. Part of the revenue would pay for another food tax reduction while the remainder could help with the current shortfall.

1 Comments:

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February 3, 2010 at 2:13 AM  

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