published Saturday, December 8th, 2012

Tennessee has low taxes compared to most states

  • photo
    Tax protests such as this one in Atlanta have been responsible for keeping taxes lower in many Southern states. Georgia has a low state sales tax.
    Photo by Associated Press /Chattanooga Times Free Press.

With the talk of sharp tax increases coming from Washington, Tennesseans received a break from bad news recently when the Tax Foundation announced that the Volunteer State has the third-lowest tax burden in America.

In its annual "State-Local Tax Burden Ranking," the nonpartisan tax research group found that only Alaska and South Dakota residents pay a lower portion of their incomes in combined state and local taxes than do Tennesseans.

The Tax Foundation determined that, thanks to a lack of state income and property taxes, Volunteer State residents shell out a comparatively reasonable 7.7 percent of their income for state and local taxes. That amount is still both more than most Tennesseans would like and more than the government realistically needs to adequately provide appropriate services. Yet, Tennessee residents get off easy compared to some surrounding states.

North Carolina's state and local governments, for example, snag a jarring 9.9 percent of residents' income. Where Tennessee has the third lowest combined state and local tax burden in America, the Tar Heel state has the 34th lowest tax rate. To make matters worse for North Carolinians, in just the past decade, North Carolina has gone from having the 23rd highest combined tax burden to the 17th highest.

As a Tennessean, it's not fun routinely paying more than 9 percent in sales taxes on most items, but it sure beats shelling out the hefty state property and income taxes faced by our neighbors to the east.

If you're doing Christmas shopping, Georgia is the place to do it. The state has a general sales tax rate of just 4 percent. Further, local governments are limited in what they can add to that rate. On the flip side, what it loses in sales tax revenue Georgia makes up for in its hefty individual tax. Overall, Georgia comes in with the 18th lowest combined state and local tax burden in America at 9 percent.

Alabama ranked solidly in the top-10 least-taxed states in the Tax Foundations' ranking of state and local tax burden, coming in eighth-lowest overall. With no state property tax and a relatively low income tax, Alabama residents pay an average of 8.2 percent of their income in local taxes.

Regardless of what new federal taxes may be slapped on Americans on Jan. 1, it's important to remember that state tax rates can vary greatly and make a significant impact in how much of our paychecks we get to bring home. Tennessee's state and local leaders clearly understand this fact and allow Tennesseans to keep a lot more of their hard-earned dollars than residents of most other states.

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EaTn said...

Tennessee has one of the highest regressive sales tax in the country, meaning those families who spend a major part of their income on purchases pay a larger portion of their income than those who purchase less. Before purchasing out-of state to avoid paying sales tax, folks need to check to see if they are in violation of the state and local laws.

December 8, 2012 at 5:45 a.m.
rolando said...

Yeah, right.

Let's just limit all income, regardless of source or form, to say...$100K gross income...with everything above that going to the government to pass on those who make less than $100K [keeping a piece of the action for themselves].

The states could then keep everything over say...$75K...to allow them to operate. Cities/counties could whittle that down to $70K, maybe. That would equalize us all.

Since we then would all make the same amount of money, working or not, we could all just quit work and draw a $70K dole. That would work, right?

December 8, 2012 at 7:31 a.m.
hambone said...

Where does Tennessee rank in education, income, crime, unemployment or health?

Somethings are more important than low taxes but it's easy to see where your heart is.

December 8, 2012 at 7:52 a.m.
fairmon said...

hambone said... Where does Tennessee rank in education, income, crime, unemployment or health?

Somethings are more important than low taxes but it's easy to see where your heart is.

hambone...regardless of the ranking in those areas it is not necessarily related to the tax rate. Check out Chicago and New York tax rates and results in those areas.

December 8, 2012 at 9:11 a.m.
conservative said...

Many cities and states have a huge problem with unemployed transients.

I can't prove it but I believe our sales tax on groceries and our high sales tax deters many from laying over in Tennessee and becoming a burden on our taxpayers.

December 8, 2012 at 9:24 a.m.
EaTn said...

conservative said...."I believe our sales tax on groceries and our high sales tax deters many(transients) from laying over in Tennessee and becoming a burden on our taxpayers".

You unwittingly hit the nail on the head--the same deterrent for transients is also a major burden on those state citizens who are unemployed, underemployed or living on minimal wages.

December 8, 2012 at 10:25 a.m.
potcat said...

All one has to do in TN.is pay Telephone,cable and internet, almost half the bill is taxes.

high sales tax on EVERY thing one buys in TN. hurts the poor, it does'nt effect some one with money.

December 8, 2012 at 12:05 p.m.
aae1049 said...

Excellent point Potcat. The City of Chattanooga has voted for increases in franchise fees that appears on all Natural Gas bills in Chattanooga. In 2010, the City increased that amount by 5 percent. The City tacks on franchise to comcast, Tn American,....They are driving up the cost.

December 8, 2012 at 7:02 p.m.
rolando said...

Please, potcat, at least get the numbers relatively CLOSE before ranting.

"Half the bill", indeed...and yet...and yet...literally all taxes and fees imposed on companies are passed directly onto the customer through increased bills...which raises the sales tax, too.

Seven percent [give or take] of $150,000 for a new boat or a couple hundred thousand for a motorhome is NOT chicken feed. Oh, your poor can't afford to buy any of those? Well, their new Yugo [or whatever] will draw the same percent for a whole lot less money.

And THAT, my friend, is what REALLY bothers them...they want all the really expensive goodies without paying a cent or working for them...lacking that, they don't want those who CAN afford them to be able to buy them either.

December 8, 2012 at 10:58 p.m.
conservative said...

EaTn, regarding your "You unwittingly hit the nail on the head--the same deterrent for transients is also a major burden on those state citizens who are unemployed, underemployed or living on minimal wages"

A valid point. However, a sales tax on groceries or an item could be construed to be a burden, as you did, on the "unemployed, underemployed or living on minimal wages."

Furthermore, even the cost of groceries or any item could be considered by some to be a burden on the "unemployed, underemployed or living on minimal wages."

So, what is your solution or what do you recommend and why didn't you?

December 9, 2012 at 8:15 a.m.
potcat said...

rolando, i know what charges are on my bill. You are wrong. Do you think i just pulled this out of my ass, you moron.

December 9, 2012 at 8:46 a.m.
joneses said...

Shhhh, please do not tell dummycrats that Tennessee has lower taxes than most states. They will inherently want to raise them. Shhhhh.

December 10, 2012 at 7:44 a.m.
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