I received a mailer from Gov. Haslem, extolling his accomplishments, as well as his worth to all Tennesseans. Among his listed accomplishments is a reduction in the sales tax on food. When Haslem went into office the tax on food was a whopping 5.5%. It is now a whopping 5%. But the governor is proud of the reduction and probably thinks we Tennesseans should be proud of him.
But, the figures make it a funny story. The reduction means if you spend $100 at your grocery store you will save 50 cents. A family of four spends roughly $146. to $289. per week on groceries, by some estimates. So, if you are a low spender at the grocery store you will save $38. per year and if you are a high spender you could save as much as $75. Think of all you can do with that $75!
Remembering, all sales tax is regressive. Poor people have a higher % of their income going into tax than the governor does. We get our tax from the poor and the young here in Tennessee. The young, because typically, they have more purchases to make.
But, here is where Haslem’s story gets ugly — real ugly! Tennessee loses approximately 20 million in revenue from that half-% food tax cut that the governor brags on. In 2016 the Tennessee inheritance tax will be wiped off the books. With the current 5 million exemption, only wealthy people will pay this tax. Remembering, some of this money may never be taxed at the state level or even federal level, depending on the type asset and the exemption. By striking the “death tax” the state treasury will lose approximately 104 million in revenue. Nobody can accuse us of not taking care of our wealthy in Tennessee!
If the treasury runs short of receipts, we know where we can get money. We can get it from the poor and the young. Else, they will just run through with it.
Now, as I think about it; it’s not such a funny story after all.