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January 4, 2007

Naifeh: What Surplus?

tnflag.jpgTennessee House Speaker Jimmy Naifeh says the legislature can't take the sales tax off food unless it raises some other taxes to make up for the "lost" revenue. What The Tennessean fails to tell readers is that the legislature could have removed the sales entirely from food a year ago based solely on the surplus revenue the state received that year. Removing the sales tax from food would not have left a "hole" in the state budget. When politicians like Naifeh say they can't cut a tax without raising another tax all they are really telling you is they don't want to cut taxes at all.


Comments

It's just a card he doesn't want to give up in the income tax game. If he cedes the sales tax now he can't play it as a concession to the income tax later.

These forces have not gone away... they are just dormant like the 7 year cicada.

Posted by: jimmy at January 4, 2007 9:09 AM

Naifeh simply wants to be "for" reducing the sales tax on food while being "frustrated that it can't be done." Its an old political trick often used to stop a popular issue.

The fact is that there was enough excess revenue in the 2005-6 budget to take most, if not all, the sales tax off food. We know of $350 million in surplus and suspect there is quite a bit more. Removing the state sales tax from food would require approximately $450 million a year. Virtually all proposals suggest reducing the food sales tax by 1/2 to 1 cent per year ($35-70 million) whenever there is a surplus. That way the state would never miss the revenue and the people of this state would benefit from lower taxes on food.

It can be done over time if there is the political will to do it.

Posted by: Jim at January 4, 2007 12:12 PM

Remember, too, that the loss wouldn't be the total amount of food tax, since that money will likely be spent elsewhere and taxed. If people spend the $450M that they save elsewhere, it would generate over $40M in sales taxes, making the actual "loss" just $410M while spurring the economy.

Naifeh and his ilk don't understand economies.

Posted by: Michael Chaney at January 4, 2007 5:23 PM
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