Would cutting the food tax make a TN personal income tax necessary?
A. TFT believes that the creation of a balanced, common sense tax system will ultimately require a state income tax, as part of a comprehensive tax-restructuring package. The issue of a comprehensive tax package, however, is a much larger debate than whether or not we should cut the state food tax. In practice, there is little connection between states that tax food and states that have an income tax. Of the 9 states without a broad-based income tax, only 2 tax food (Tennessee and South Dakota). Of the 41 states with a broad-based income tax, 12 tax food. The reason there is such little correlation between the two is that the food tax represents a very small, yet very unfair, portion of state revenue. In Tennessee, it represents less than 2% of the overall revenue, an amount that could easily be replaced, even without a state income tax. corporations would be paying less tax. Then why are they opposed to it?
