Tennessee’s Sales Taxes Highest
The relatively high sales rate puts retailers in border towns at a competitive disadvantage and disproportionately hurts the poor who spend more of their income on purchases. Supporters of the tax system insist it is better to tax consumption than income.
President of the Beacon Center, Justin Owen, said, “While we would love to see all taxes lower, the sales tax is a stable source of revenue for the state and is paid by nearly everyone. We’re fortunate not to have a tax on earned income because states that rely more upon the income tax generally aren’t growing as much and lose a lot more revenue when the economy turns sour.
Among nine states that do not impose a tax on payroll income is Tennessee.
More than 46 percent of state and local taxes in Tennessee come from sales taxes, said Scott Drenkard, an economist for the Tax Foundation.
The heavy reliance upon the sales tax makes the state of Tennessee one of the most regressive, said Elizabeth Write, executive director of Tennesseans for Fair Taxation.
Tennessee Gov. Bill Haslam is proposing to lower the state sales tax on food from 5.5 percent to 5 percent over the next three years.