state taxes

Blackburn online Senate campaign ad (she opposed TN income tax)

In this online video for her U.S. Senate campaign, Rep. Marsha Blackburn points to her opposition to a state income tax while she was a state senator and takes a swat at TennCare in the process. She says the tax was proposed by a governor (Republican Don Sunquist, not mentioned in the video) “trying to pay for this test case for Hillary Care, which was called TennCare.”

Hall tax repeal prompts letter-writing war between GOP legislators and Democrats

A letter-writing war has been underway in recent editions of The Cleveland Daily Banner between Republican state legislators representing Bradley County and Democrats. A letter from state Democratic  Chair Mary Mancini was the latest episode and prompted the newspaper to do a roundup story that chronicles the back-and-forth written sniping.

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Haslam: GOP tax bill will bring more immigration to TN from other states

Gov. Bill Haslam says more people from states such as New York,  New Jersey and California are likely to move to Tennessee with enactment of a Republican federal tax package that eliminates current deductions for payment of state and local taxes, reports the Murfreesboro Daily News Journal.

As Haslam explains it, those living in states with higher tax rates currently see a greater federal tax deduction. Residents in Tennessee, a low-tax state, don’t benefit as much from the state and local tax deduction.

“That changes now,” Haslam said, speaking Monday at Nissan’s Smyrna plant. “A lot of people who live in states with income tax of 10 or 12 percent start going, ‘Huh, well, only having to pay half is not such a bad deal, but if I’m having to pay all of it, maybe I’d be better off in Tennessee.’ We think it actually will encourage both investment growth and population growth in Tennessee.”

William Fox, an economist at University of Tennessee Knoxville, said research shows  tax rates can affect where people leave, but the impact is small. And there are several caveats to keep in mind with that calculation. Taxes pay for services, so when changing residences, an individual may also be giving up tax-funded services they enjoy.

“There is a small impact of taxes on where people live,” Fox said. “With the elimination of the deductibility, you make it more expensive to live in high-tax states.”

Another point to keep in mind, Fox said, is that the elimination of state and local tax deductions only affects those who itemize tax returns. Thirty percent of taxpayers itemized deductions in 2014, according to the Tax Policy Center. For those individuals, ending the state and local tax deduction would make Tennessee more attractive, he said.

Black appointed to House-Senate conference committee on tax legislation

Press release from U.S. House Budget Committee

Washington, D.C. – House Budget Committee Chairman Diane Black issued the following statement after the U.S. House of Representatives voted on a motion to go to conference with the Senate in order to deliver tax reform for the first time in more than three decades. Chairman Black has been appointed by Speaker Paul Ryan to serve on the conference committee.

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State’s October tax revenue $1.3M under budget estimate

Press release from Department of Finance and Administration

NASHVILLE, Tenn. – Tennessee revenues for October exceeded revenues from the same month a year ago, but were marginally less than the budgeted estimate. Finance and Administration Commissioner Larry Martin reported today that October revenues were $1.0 billion, which is $31.1 million more than October of last year and $1.3 million less than the budgeted estimate. The growth rate for October was 3.16%.

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TN September tax collections $58.8M over estimates

News release from Department of Finance and Administration

NASHVILLE, Tenn. – Tennessee’s revenues exceeded budgeted estimates for the second month of the state’s fiscal year.  Finance and Administration Commissioner Larry Martin today reported that overall September revenues were $1.4 billion, which is $48.3 million more than September of last year and $58.8 million more than the budgeted estimate. The growth rate for September was 3.68%.

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‘Bah, humbug!’ on sales tax holidays (from the Tax Foundation — and, kinda, UT’s Bill Fox in an update)

(Note: If you’ve looked at TV news, listened to the radio or read any newspaper in Tennessee the past few days or so, you will have seen reports on the “tax holiday” — no sales tax on designated purchases — this weekend. The statewide USA Today Network – Tennessee version is HERE. On the other hand, there’s this.)

 

News release from The Tax Foundation

Washington, DC (July 25, 2017) – Sales tax holidays represent poor tax policy, costing states revenue while providing little benefit, according to a new Tax Foundation report.

More policymakers are recognizing this less-than-desirable tradeoff; Tennessee is one of only 16 states to use sales tax holidays for 2017, down from a peak of 19 states in 2010. Tennessee will offer a back-to-school sales tax holiday July 28-30.

Key Findings:
  • Sales tax holidays create additional tax compliance costs, but larger businesses tend to lobby for the holidays as a form of free advertising.
  • Most sales tax holidays involve politicians picking products and industries to favor with exemptions, arbitrarily discriminating among products and across time, and distorting consumer decisions.
  • While sales taxes are somewhat regressive, this does not make sales tax holidays an effective tool for providing relief to low-income individuals. In order to give a small amount of tax savings to those with lower incomes, holidays give a large amount of savings to higher-income groups as well.
  • Political gimmicks like sales tax holidays distract policymakers and taxpayers from genuine, permanent tax relief. If a state must offer a “holiday” from its tax system, it is an implicit recognition that the state’s tax system is uncompetitive. If policymakers want to save money for consumers, then they should cut the sales tax rate year-round.
“Sales tax holidays have enjoyed political success, but recently, policymakers are reevaluating them,” the report says. “Rather than providing a valuable tax cut or a boost to the economy, sales tax holidays impose serious costs on consumers and businesses without providing offsetting benefits.”
The full report is HERE.

UPDATE: From a USA Today story, citing the posted news release:

Some critics contend that consumers might save even more without the holidays, as retailers would mount sales of their own timed to events such as back-to-school.

Bill Fox, director of the Boyd Center for Business and Economic Research at the University of Tennessee, said he took advantage of Tennessee’s recent holiday to buy several pairs of running shoes. “That 9 ¼ percent I saved is minuscule in terms of ‘savings,’ ” he said. “The stores would be giving a much better discount if they had a sale. Back-to-school sales would have been like 25 percent off, not 9 percent, and people would have saved more.

June TN tax collections: $112M over budget estimates

News release from Department of Finance and Administration

NASHVILLE,  Tenn. – Total tax revenues for June were above budgeted expectations. Finance and Administration Commissioner Larry Martin announced today that overall Tennessee tax revenues in June, led by strong growth in franchise and excise (F&E) taxes, were $1.4 billion, which is $112.1 million more than the state budgeted.

“While we are encouraged by the positive revenue numbers, we need to be mindful of two important points,” Martin said. “First, the Funding Board in November 2016 revised upward for the fiscal year 2017 budget the anticipated positive variance for overall Tennessee taxes. As a result, $663.3 million of the fiscal year 2017 unaudited year to date positive variance of $731.3 million general fund revenue is already included in the fiscal year 2018 budget. Secondly, F&E tax payments by businesses are estimates of their tax liability and are subject to change.”

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Speedy governor signs IMPROVE tax package into law

Gov. Bill Haslam has signed into law the “IMPROVE Act,” including increases in gasoline and diesel fuel taxes, on Wednesday — just two days after it gained final legislative approval, according to the governor’s press secretary, Jennifer Donnals.

That’s rapid processing, both for the legislative staff and the governor’s office. Often it takes a week or so for a bill to go through the “engrossing” process and other steps in formal requirements for presentation of a bill in final version to the governor. And then the governor has 10 days (counting Saturdays, but not Sundays), once a bill reaches his desk, to sign it, veto it or let it become law without his signature.

Presumably, the governor and legislative leaders simply wanted the process complete as they  move to wrap up work on the state budget in the coming week or two. Action on the budget has been delayed this year – last year, the legislative session ended on April 20th – because several budget provisions hinged on whether or not the IMPROVE Act was approved or not.

In an email to media, Donnals says a more ballyhooed “ceremonial signing” will be scheduled at a later date. That will give legislative leaders and other dignitaries a chance to watch (and perhaps make speeches) as the governor goes through the motions of signing again a bill that has already become law.

Study finds vehicle sales tax more volatile than fuel tax

The Sycamore Institute, founded in 2015 by former state Sen. Jim Bryson of Franklin (also the Republican nominee for governor in 2006) and billing itself as a “nonpartisan policy research center for Tennessee,” has issued a 20-year comparison of state fuel tax revenue and sales tax revenue from vehicle sales taxes.

The accompanying chart shows state sales taxes on vehicles dipped by nearly 20 percent during the 2008 recession. Fuel taxes dipped by about 5 percent during that time.

gas-tax-revenue-and-car-sales-in-tennessee

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