The Income Tax Sting

December 15, 2004

The headline in an area paper read, “Slower tax gains threaten some state programs.” The article said revenue projections for the state of Tennessee were expected to be $100 million less than expected. In the next breath they said we may see “some government programs scaled back.” I'm trying to understand this. Instead of having $400 million more next year we're going to have $300 million more and they'll have to scale back some programs? This is more of that old oxymoron “liberal logic.”

 

The people who conclude that a $300 million increase in revenue calls for scaling back are the same forces that are pushing for a state income tax. These same news sources failed to expose the recent Tax Study Commission as the farce it was. This so-called study commission, that concluded that we had to have a state income tax, was given the weight of a legitimate research organization despite the fact that every last member was appointed by either Don Sundquist, Jimmy Naifeh or John Wilder, all rabid pro-income tax politicians.

 

These pro-income tax folks are also the same people who have been trying to convince you that the sales tax doesn't keep up with the needs of the states. The truth is, of course, the sales tax is a much more reliable source of revenue for the state than the income tax. In bad times, people find themselves out of work. No income, no income tax. However, when people are out of work, they still buy things, whether they dip into their savings or borrow the money. In November, overall tax revenues were up 1.4 percent over November of last year. Sales tax revenues, however, were up twice that, at 2.8 percent.

 

Don't be fooled by those who claim the sales tax doesn't keep pace with the needs of the state. There's a big difference between needs and desires and that's where the problem lies. These people desire expansion of all these programs that, quite frankly, we can live without. Although I give Governor Bredesen high marks for working within the revenue we have, he's been robbing Peter to pay Paul. This year's Christmas wish list includes a program that will almost certainly bring the cry for an income tax to the forefront once again. The desire of the present administration is to phase in a pre-K program for 4-year-olds that will cost something on the order of $370 million per year. Do we need a pre-K program? Of course, not. There are certainly kids who need extra attention prior to entering kindergarten but that attention needs to come from the parents, not the government. We should be demanding our state's parents take a more active role in the development of their children rather than passing the buck to the bureaucrats.

 

I can see it coming a mile away. The legislature's going to pass this new layer of bureaucracy then the usual suspects will push their way to the front and scream that the world as we know it will come to an end without an income tax. It's the perfect political storm. The tax study commission recommends an income tax. The governor proposes a brand new program to help the children. After the program is phased in, we don't have enough money to fund it. Remember, it costs $370 million and we're increasing revenue by $300 million. What do we do? If you care about the children, they'll say, you'll support the income tax. As I've said many times, if you care about the children, you'll let their parents keep more of their money.