The Republican-controlled Tennessee General Assembly passed yesterday a $53 billion budget that included a $1.6 billion cash handout for some property-rich corporations and a new $400 million annual state tax break benefitting those same companies.
Earlier in the day, nonpartisan think tank THINK TENNESSEE released research showing that companies in the state already pay one of the lowest effective business tax rates in the nation, while low- and middle-income families pay an effective state tax rate of 12.8 percent and 9.4 percent respectively.
“In Tennessee, the total effective business tax rate is 4.5%, lower than the national average and all but 10 other states,” the report states.
“A closer look at the state’s tax structure and revenues shows low-income families have higher tax burdens than wealthier families and businesses.”
In Tennessee, billion-dollar companies pay a lower effective tax rate than school teachers, nurses and factory workers and the budget passed yesterday will widen the disparity in tax rates between profitable corporations and working families.
The legislature funded Governor Bill Lee’s recommendation to repeal one section of the state’s 90-year-old two-factor “franchise tax” – a change that will result in a roughly $400 million reduction in corporate tax collections each year. The budget also set aside $1.6 billion for direct cash payments to these same companies.
During the budget vote, Democratic Sen. Charlane Oliver introduced an amendment to redirect the unprecedented corporate handout to pay for a one-year grocery tax holiday, but the Republican majority blocked the effort.
Tennessee is one of only 13 states with a tax on groceries and application of the tax disproportionately falls on low- and middle-income families.
Tennessee’s regressive tax structure and spending policies have disadvantaged working families in several major ways, according to the THINK TENNESSEE report:
• Working and middle class families pay a higher effective tax rate than billionaires and big corporations;
• Tennessee’s GOP-controlled legislature ranks eighth in the nation for the percentage of the state budget dedicated to “programs and services benefitting businesses rather than individual or families”; and
• Tennessee spends significantly less per capita than national and Southeast average on programs and services that benefit working families.
“Tennessee’s low-tax rates and regressive tax structure result in lower revenues and less funding available for schools, healthcare, public safety, transportation, and other services,” the report says.
Brandon Puttbrese, spokesman for the Senate Democratic Caucus, said billionaires and special interests have lobbied to set up Tennessee’s tax system to benefit the wealthy at the expense of everyday families.
“Gov. Bill Lee’s $1.9 billion budget handout to big corporations is clear evidence that Tennessee’s economy is rigged against workers who punch a clock,” Mr. Puttbrese said. “We can’t afford to invest in critical services for working people and build a future for all of us when Republicans pass laws allowing billion-dollar corporations to pay less than their fair share.”
* * *
Class struggle now is often in social media and news forums. Mr. Puttbrese’s post contends Republicans put big business over families with phrases like “cash handouts for property-rich corporations” and “state tax breaks benefiting those same companies.” This is class warfare terminology.
A less wordy response should note Tennessee is a business friendly state and good place for working families as indicated in the recent US News & World Report. The Tennessee economy was 16th of 50 and ahead of many Democrat ruled states: OR(25), CA(29), MI (36), PA (38), IL (39) and NY (49).
Tennessee is one of the fastest growing states where California, Illinois, New York, Pennsylvania and Oregon are leading the other 50 in losing population. Is that why Democrats oppose HR7109 assigning House seats on the number of citizens and determining federal funding over the next decade?
Tennessee has no personal income tax where those states losing population are among the highest taxing workers and seem to believe more regulation equals better quality life. They are also states where unions are the strongest. Tennessee is a right to work state.
Could it be the Republican controlled legislature, although far from perfect, is moving this state in a direction that is good for business and citizens looking for work to benefit their families? Otherwise why are they continuing to win elections?
Ralph Miller