Sales Tax or Income Tax? That is the Question

The problem with the methods of raising revenue in Tennessee is not that there is an undue burden placed on the poor as a result of dependency upon sales tax. The problem is that there are too many exemptions from sales taxes. In Tennessee there are more exempt dollars spent on goods and services than non-exempt dollars. If ALL exemptions were eliminated, the tax rate could be lowered to less than 7% (including local options) and still fund state government without the imposition of an income tax. The only reason for so many actual sales transactions to be exempt is because of the special interests. How does it make any sense that food for people are taxed while food for jackasses are not? Another problem with the Tennessee sales tax is the limit of $1600 for full tax and $3200 for partial tax and exemption from sales tax on any single item the amount over $3200. The sale of a Porsche should be fully taxed as is the sale of a used Yugo. The sales tax on a $15,000 fur coat should be higher than the sales tax on a $3,500 coat. There is no reasonable reason for a cap on the amount of a sales transaction subject to tax other than those who have a lot of money and spend a lot of money on very expensive items have the political clout resulting in tax laws that benefit them to the exclusion of others. Making issue out of whether sales tax or income tax is the best way to fund government in Tennessee is moot until such time as various exemptions, exclusions, and other special benefits and favors are removed from the system of government. The same problem occurs in trying to equalize funding for education. While it is true that rural areas do not have the tax base that the more populated cities possess, it is also true that people living in rural areas are paying less per square foot of property for education than people in the cities. Much of rural property is taxed at lower rates than city property because of "agricultural zoning classifications" and other preferences. Much rural property is valued almost as much per square foot as urban property, but the agricultural lobby has resulted in payment of lower taxes per square foot. Equalize the tax payments before state subsidies are used to equalize salaries. One additional point on the subject of equalized funding for education. The overall cost of living such as rent or housing is usually lower in rural parts of the state. For this reason, a cost of living index should be factored into any plan to equalize funding for education.