Diary

Tennessee Does Not Need an Income Tax

The Chattanooga Times has decided that an income tax is best for the state Tennessee. I cannot disagree anymore vehemently, and I’m not certain why the Times would choose to open this debate again. When our state was facing a similar recession and budget shortfall almost a decade ago, the idea of a state income tax was rejected and has long been considered unconstitutional under the Tennessee constitution. The idea was a knee jerk reaction then just as it is now.

The logic of the argument of the Times is just another example of what has become all too common these days: if there’s a problem, let’s have the government throw more money at it to try and fix it. I believe that given time and opportunity and the freedom from the heavy hand of government, the free market has the capacity to fix any financial problems that come our way. I believe that government should learn to live within a budget, just like our families and small businesses must do, instead of raising or creating taxes when they want to spend more of our hard earned money. I believe in less government and more private ingenuity.

Most experts agree that TennCare has already proven to be a financial disaster for our state, yet the Times suggests that we create a new tax on the citizens of Tennessee and pump more money into what has become a financial sinkhole.  If anything, we need less government intervention in our health care system.

They also list a number of programs that will be in financial trouble once federal stimulus funds expire and, therefore, will need financial support from the state. When did it become the norm to expect the government to bail you out if you couldn’t make it on your own? The bigger problem is not programs that are going to run out of government funding but rather the ever growing number of programs that rely on government funding to exist. When a family of 4 hits hard times and has trouble making ends meet, they learn to make sacrifices – not sign up for a new credit card. Our government needs to watch and learn from the hard-working folks across our country and stop this mentality of “spend-our-way-to-prosperity.”

Tennessee is one of only a few states in the country with no income tax. This gives us an advantage over other states and allows us to have access to economic growth that they do not have.  Every year, many Californians “go Nevadan” as they move across state lines to Nevada, which has no income tax. In the last year, we have heard about many people in New York considering a move to Florida where no income tax exists and the “disappearance” of hundreds of affluent Maryland citizens that have fled the state to escape its income tax.

Tennessee’s economy has been fairly stable during this economic downturn due to our use of a sales tax and not an income tax.  An income tax is not a panacea to a state’s fiscal problems.  States with income taxes are having serious budget problems as well.  In fact, the states with the highest income taxes are having the biggest budget problems – New York, California and New Jersey to name a few.

Although the position of the Times is that the tax should be imposed on the rich, government seldom has the discipline to limit a tax’s reach. Inevitably, income taxes “creep” down to the middle class. This is either the result of not indexing the tax to inflation, or that, once a tax is in place, it is an easy way to raise funds for pet projects or fill holes in budgets rather than exercising fiscal discipline. People who work hard to create income are not rich; they are productive. Let’s reward such conduct – not punish it.

Being one of only nine states without an income tax has made Tennessee more attractive to companies looking to grow or relocate, and each of those opportunities has lead to tremendous economic growth for our state and has helped us ride out this economic storm much better than many other states. Let’s not debate this issue again: Tennessee does not need an (unconstitutional) income tax.

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