Economist opposes grocery tax cut; Haslam says it’s fair

NASHVILLE, Tenn. (AP) – Reagan administration economist Arthur Laffer is urging Tennessee lawmakers not to include a cut in the sales tax on groceries as part of Republican Gov. Bill Haslam’s proposal to offset a gas tax hike.

Arthur Laffer said in a House meeting on Wednesday that bigger cuts on business taxes would do more to spur the economy. Democratic Rep. John Mark Windle of Livingston challenged Laffer about whether working families wouldn’t benefit from paying less on essential food items like baby formula.

Laffer responded that such a move would “cut the tax on my buying a steak or caviar,” and that argued that lawmakers should focus on having the greatest economic impact. (Note: He also described the grocery tax cut as “silly pandering.”)

Haslam wants to boost transportation funding by about $280 million annually, while also cutting a commensurate amount of taxes.

Further from the Times-Free Press:

On Thursday Windle rejected Laffer’s argument, saying, “I vehemently disagree with him that cutting taxes on baby formula, milk and eggs and bread for working families is a bad idea or it doesn’t help the economy.”

The Upper Cumberland Plateau lawmaker, who represents a largely rural area, added: “I don’t represent the fat cats out in Belle Meade. And I’m not really concerned about their steak and caviar. I’m worried about working families making ends meet.”

… Haslam told reporters Thursday that while he agrees with Laffer that the corporate tax cut is good for attracting businesses and encouraging existing companies to expand here, he is also trying to be even-handed when it comes to tax reductions.

“If we are going to have a tax cut, I’d like some of that to go to the one tax that everybody pays, and that’s the grocery tax,” Haslam said. “Will that bring more business to Tennessee? No. But is it fair? Yeah, I think it is fair.”

2 Responses to Economist opposes grocery tax cut; Haslam says it’s fair

  • Betty Sands says:

    Laffer is an advocate of the now-discredited supply-side trickle-down economic philosophy. It only helps the 1%. Corporate profits are already high. Tennessee consumers, especially low-income consumers trying to feed their families, need relief. Tennessee is among the minority of states that continues to tax groceries.

  • Margaret Pile says:

    This is helping people. The lower your income, the greater percent is spent on food. I agree with the cut on the tax on food. Trickle down doesn’t work. Thank you, Represenative Windle
    Now, we need more of our elected officials speaking for us.

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Former Knoxville News Sentinel capitol bureau chief Tom Humphrey writes about Tennessee politics, government, and legislative news.
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