Tennessee Tax Tally …
Posted by: Blue Collar Muse in Blogroll, Business, Conservative, Politics, Taxes, Tennesee TipsHat tip to Adam Graham over at Adam’s Blog for pointing me to this report.
The National Tax Foundation released their state rankings for 2008 and included the state rankings for 2003 through 2007 as well. Tennessee, by virtue of its lack of a state income tax, shows in the mid teens for all 6 years. We ranked either 15, 16 or 17 in these years and are currently at 16th in the nation overall.
I thought I would look at the numbers for the last couple of years and examine the top and bottom of the country’s state rankings. 2005 data is not listed. I don’t know why.
2004 2006 2007 2008
#1 WY WY WY WY
#2 SD SD SD SD
#3 NV NV NV AK
#4 AK AK AK NV
#5 FL FL FL FL
TX #6 #6 #6 #8
TN #17 #15 #17 #16
IL #25 #29 #27 #28
#46 VT CA CA OH
#47 NJ OH NJ CA
#48 OH NJ NY NY
#49 RI NY OH NJ
#50 NY RI RI RI
At first glance, the observation that comes to mind is that the top 5 states listed have no income tax. According to Right Mind, 7 of the top 10 do not have an income tax. The Red State/Blue State comparison is interesting as is the geographic breakdown. Evidently, the bluer one gets the higher ones taxes. Only Florida is out of the NW or Northern Plains area for the best ranked states and only Vermont and Ohio are not one of the original 13 colonies. Evidently these states are farther down the road from Faith, Courage, Liberty and Abundance to Complacency, Apathy, Dependence and Bondage. I hope I don’t live long enough to see th rest of the country follow that road.
The study takes into account a variety of taxes for each state. This contributes to the different rankings. The taxes used to evaluate a state are:
Corporate Taxes
Individual Income Taxes
Sales Taxes
Unemployment Insurance Taxes
Property Taxes
Thus while a state may rank high in the Income Tax category, such as Tennessee, our other taxes bring our overall ranking down. But the overall rankings are still interesting to see how the states wash out. For instance, TN is comfortably in the top third overall for 2008 due to being 8th for Income Tax while 48th for Sales Tax. While it is bad being 48th, the state must still raise revenue for its budget. That it does so via a Sales Tax as opposed to an Income Tax is not only good for rankings but good for Tennesseans! We could be living in NY which enjoys its bottom of the barrel rankings due to being 41st in Income Tax and 49th in Sales Tax. NY citizens get hammered on both counts. In fact, NY ranks in the bottom 10 for every tax category except its 23rd showing in Corporate Tax. The rankings for OH, RI and NJ share similar influences. They are the worst in virtually every category of tax. The final rankings for those states involve better Unemployment Tax rates.
Population density seems to play some sort of role. NY and CA have the country’s two largest cities and they fare poorly. CA has several of the cities in the top 100 cities ranked by population by the Census Bureau in 1990. By contrast, the 4 states at the top of the rankings only have 2 cities in the top 100, Anchorage and Las Vegas. Both of those cities rank in the 60s with populations a little over 250,000 each.
The bottom line is that the worst tax situations for citizens come from heavily Democratic states and the best come from traditionally Republican states. Those states that deem high taxes are a good thing generally apply that opinion to most of the taxes they collect.
For Tennessee, we could improve our rankings by lowering 3 taxes – Sales (48th), Property (35th) and Unemployment (31st).
I’d love to see lower rates in all three areas. It would make our state even more attractive to business and manufacturing which would be good for job growth. It would expand our population base as people move here to enjoy lower taxes. Hopefully it would change the state’s makeup enough that the Democrats would lose even more influence even in traditionally Democratic strongholds like Nashville and Memphis. Of course, we’ll need to make sure the folks gaining influence are Conservatives who will maintain the low-tax, less government, more personal freedom approach that will provide such a change. Time will tell.
Thinking that being Sweet 16 in the rankings leaves us just 6 slots from the Top Ten …
Blue Collar Muse
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October 17th, 2007 at 12:05 pm
The moral of this story is that taxing income makes us poorer. A couple of features that make it particularly pernicious is that it is taken from us working-hour by working-hour (reflected in withheld “fruits of labor” every two weeks in our paychecks). If that’s not bad enough, clever politicians tax income and payroll of businesses who pass along the costs to us in higher (hidden) taxes. Yep, that’s right, WE - THE CONSUMERS - end up paying business’ tax costs (or, we - as shareholders, or, we - as “now unemployed” former employees of those businesses who cannot pass the costs through).
While many who are invested in the current income tax system seek to demagog the well-researched FairTax plan (1), FairTax’s theoretical underpinnings have been professionally reviewed (2), and its acceptance in the professional / academic community continues to grow (3).
Renown economist Laurence Kotlikoff believes that failure to enact the FairTax - choosing instead to try to “flatten” what he deems to be a non-flattenable income tax system - will eventuate into an irrevocable economic meltdown (4) because of the hidden aspects of the current system that make political accountability impossible. Tom Frey, of the DiVinci Institute, foresees the coming collapse of the income tax system (5).
Here is why the FairTax MUST replace the income tax. It’s:
• SIMPLE, easy to understand
• EFFICIENT, inexpensive to comply with and doesn’t cause less-than-optimal business decisions for tax minimization purposes
• FAIR, loophole free and everyone pays their share
• LOW TAX RATE, achieved by broad base with no exclusions
• PREDICTABLE, doesn’t change, so financial planning is possible
• UNINTRUSIVE, doesn’t intrude into our personal affairs or limit our liberty
• VISIBLE, not hidden from the public in tax-inflated prices or otherwise
• PRODUCTIVE, rewards, rather than penalizes, work and productivity
Its benefits are as follows:
For INDIVIDUALS:
• No more tax on income - make as much as you wish
• You receive your full paycheck - no more deductions
• You pay the tax when you buy “at retail” - not “used”
• No more double taxation (e.g. like on current Capital Gains)
• Reduction of “pre-FairTaxed” retail prices by 20%-30%
• Adding back 29.9% FairTax maintains current price levels
• FairTax would constitute 23% portion of new prices
• Every household receives a monthly check, or “pre-bate”
• “Prebate” is “advance payback” for taxes payable on monthly consumption to poverty level
• FairTax’s “prebate” ensures progressivity, poverty protection
• Finally, citizens are knowledgeable of what their tax IS
• Elimination of “parasitic” Income Tax industry
• NO MORE IRS. NO MORE FILING OF TAX RETURNS by individuals
• Those possessing illicit forms of income will ALSO pay the FairTax
• Households have more disposable income to purchase goods
• Savings is bolstered with reduction of interest rates
For BUSINESSES:
• Corporate income and payroll taxes revoked under FairTax
• Business compensated for collecting tax at “cash register”
• No more tax-related lawyers, lobbyists on company payrolls
• No more embedded (hidden) income/payroll taxes in prices
• Reduced costs. Competition - not tax policy - drives prices
• Off-shore “tax haven” headquarters can now return to U.S
• No more “favors” from politicians at expense of taxpayers
• Resources go to R&D and study of competition - not taxes
• Marketplace distortions eliminated for fair competition
• US exports increase their share of foreign markets
For the COUNTRY:
• 7% - 13% economic growth projected in the first year of the FairTax
• Jobs return to the U.S.
• Foreign corporations “set up shop” in the U.S.
• Tax system trends are corrected to “enlarge the pie”
• Larger economic “pie,” means thinner tax rate “slices”
• Initial 23% portion of price is pressured downward as “pie”
increases
• No more “closed door” tax deals by politicians and business
• FairTax sets new global standard. Other countries will follow
(1) http://snipurl.com/taxpanelrebutted (.pdf)
(2) http://snipurl.com/taxnotes_galerebut (.pdf)
(3) http://snipurl.com/econsopenletter (.pdf)
(4) http://snipurl.com/meltdowninprogress
(5) http://snipurl.com/incometaxcollapse
It’s well past time to scrap the tax code ( http://snipr.com/scrapthecode ) and pay for government the way that America’s working men and women are paid - when something is sold.
(Permission is granted to reproduce in whole or part. - Ian)