ANALYSIS: TNGOP budget puts big business over working families
Republicans approve $1.9B tax break, handout for businesses as low-, middle-income families pay higher tax rate than corporations
NASHVILLE — The Republican-controlled Tennessee General Assembly passed yesterday a $53 billion budget that included a $1.6 billion cash handout for some property-rich corporations and a new $400 million annual state tax break benefitting those same companies.
Earlier in the day, nonpartisan think tank THINK TENNESSEE released research showing that companies in the state already pay one of the lowest effective business tax rates in the nation, while low- and middle-income families pay an effective state tax rate of 12.8% and 9.4% respectively.
“In Tennessee, the total effective business tax rate is 4.5%, lower than the national average and all but 10 other states,” the report states. “A closer look at the state’s tax structure and revenues shows low-income families have higher tax burdens than wealthier families and businesses.”
In Tennessee, billion-dollar companies pay a lower effective tax rate than schoolteachers, nurses and factory workers and the budget passed yesterday will widen the disparity in tax rates between big, profitable corporations and working families.
The legislature funded Gov. Bill Lee’s recommendation to repeal one section of the state’s 90-year-old two-factor “franchise tax” — a change that will result in a roughly $400 million reduction in corporate tax collections each year. The budget also set aside $1.6 billion for direct cash payments to these same companies.
During the budget vote, Democratic Sen. Charlane Oliver introduced an amendment to redirect the unprecedented corporate handout to pay for a one-year grocery tax holiday, but the Republican majority blocked the effort.
Tennessee is one of only 13 states with a tax on groceries and application of the tax disproportionately falls on low- and middle-income families.
Tennessee’s regressive tax structure and spending policies have disadvantaged working families in several major ways, according to the THINK TENNESSEE report:
- Working and middle class families pay a higher effective tax rate than billionaires and big corporations;
- Tennessee’s GOP-controlled legislature ranks eighth in the nation for the percentage of the state budget dedicated to “programs and services benefitting businesses rather than individuals or families”; and
- Tennessee spends significantly less per capita than the national and Southeast average on programs and services that benefit working families.
“Tennessee’s low-tax rates and regressive tax structure result in lower revenues and less funding available for schools, healthcare, public safety, transportation, and other services,” the report says.
Brandon Puttbrese, spokesman for the Senate Democratic Caucus, said billionaires and special interests have lobbied to set up Tennessee’s tax system to benefit the wealthy at the expense of everyday families.
“Gov. Bill Lee’s $1.9 billion budget handout to big corporations is clear evidence that Tennessee’s economy is rigged against workers who punch a clock,” Puttbrese said. “We can’t afford to invest in critical services for working people and build a future for all of us when Republicans pass laws allowing billion-dollar corporations to pay less than their fair share.”