TN Sales Tax Revenue Slide
Loophole Could be Fueling TN Sales Tax Revenue Slide
NASHVILLE, Tenn. - New statistics show that for the fourth straight month Tennessee sales tax revenues are 10 percent below the figures for the previous year. Contributing to the shortfall are said to be many national corporations that avoid paying their appropriate share of Tennessee sales taxes; under current law, the companies can report their assets in states with lower tax rates. It's a loophole the group Tennesseans for Fair Taxation is trying to close.
Dick Williams, a board member of Tennesseans for Fair Taxation, says the state should enact legislation calling for combined reporting.
"Combined reporting would require them to report all of their income and to pay Tennessee its fair share of that."
Combined reporting mandates multi-state companies to apportion their profits according to formulas which consider how much of the firm's property, payroll, and sales are in each state. Tennesseans for Fair Taxation is preparing to lobby for the change during the next state legislative session.
Williams says that, not only is the state losing revenue from national companies under current tax law, but state companies would benefit under combined reporting.
"It's also more fair to Tennessee companies that cannot shift some of their tax burden otherwise."
Some business groups argue that making the companies pay more will eliminate jobs in the state.
Combined reporting has been successfully adopted in a majority of states and has held up to legal challenges.
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