Taxes

Working families and the poor are taxed to death in this state. I will work to change that. Nearly every tax repealed in the last two decades benefitted the wealthy far more than anyone else. The GOP has worked hard to rig the economy in favor of the haves at the expense of the have-nots. Every dollar of tax that the top 1% doesn’t pay is a dollar that must come from you and me. I will oppose every attempt to put more of the state’s obligations on the backs of people grinding out a living.

Taxes are going up if you’re poor, but they’re going down if you’re rich.  This needs to change.  The GOP Supermajority has done more harm to Tennessee’s working families than any other group or organization.  Let’s start with the Hall Income Tax.  The Hall income tax was repealed completely in 2021.  Before Republicans started whittling it away, the tax was 6% of income generated by stocks and bonds.  Let me clarify.  If your stocks and bonds generated $2000 in interest and dividends, then you paid $120 in tax.  When lobbyists ramped up their assault on the Hall Tax, they created a PR campaign that tied the tax to retirees’ income.  The Beacon Center crowed about how their PR campaign tying the tax to football was highly effective.  https://www.beacontn.org/hall-tax-finally-gone-forever/

The truth is that only 204,944 people paid the tax in 2014.  And that was only on the income their investments generated.  What nobody talked about was how much money those income-producing investments were worth.  Let’s do some math:

The average dividend yield in the U.S varies by sector and index, so let’s use 2% as a conservative guide.  This means that if you receive $2000 in dividend income from stocks, and the dividend yield is 2%, then your stocks are worth $100,000.  Good for you! You saved money, invested it, and now your money is producing money.  Under the Hall Income Tax, you would have paid $120 of tax on that $2000 of income.   In 2014, the Commercial Appeal reported that the top 1% of earners who filed the Hall Income Tax return saved approximately $5000 per year when the tax was repealed.

https://www.commercialappeal.com/story/news/government/state/2016/05/20/haslam-signs-into-law-bill-cutting-the-hall-income-tax-cut-and-later-repealing-it/90540944/

They saved over $5000 in TAXES.  Let’s do some more math:

Since the tax rate was 6%, that means a tax of $5000 was assessed on $83,333 of interest and dividends.  If $83,333 is 2% of the  value of the stocks and bonds, then that means the person who paid $5000 in Hall Income Taxes had $4,166,666 invested.  The truth is that they probably had much more than that in the bank.

I realize that explanation is lengthy, but this is how the GOP has deceived people in Tennessee who work for every dollar they have only to watch their income taxed to death so that the morbidly rich don’t have to pay anything.  By the Beacon Center’s own admission, they convinced voters that retirees were footing the bill when that simply wasn’t true.  If the only income you have as a retiree is social security, then you were never subject to the Hall Income Tax.  The tax you are subject to, however, is the grocery sales tax.

Kudos to Governor Haslam for lowering the state tax rate on groceries, but he didn’t go far enough.

Let’s use the numbers already cited to see how unfair the tax burden in Tennessee really is.  According to an article aired by WKRN, the average monthly grocery bill was $1175 in 2023.  We know inflation has pushed that number higher, but we’ll go with $1175 for this discussion.  A grocery bill of $1175 produces approximately $79 in sales tax.  A single person living at poverty level in Tennessee makes about $1800 a month before payroll taxes.  $79 per month in grocery taxes, if they spend that much on groceries, represents 4.3% of their income.  Someone making $83,000 year earns about $6900 a month.  $79 in grocery taxes represents 1.1% of their income.  A poor person pays 4 times more of their income on grocery taxes than the rich pay on grocery taxes.  For the poor person to only pay 1.1% of their income in grocery taxes would mean they would only spend $293 per month on groceries.  That’s $9.77 per day for food.  Nobody gets proper nourishment on that budget.

https://www.wkrn.com/news/tennessee-news/how-much-are-tennesseans-spending-monthly-on-groceries/

This is why SNAP is so important in Tennessee.  If the supermajority really cared about reducing reliance on SNAP and other safety net programs, they would raise Tennessee’s minimum wage to $25 per hour and enact legislation to curb runaway inflation especially in housing.