Given Phil Bredesen (D) has traveled the state raising fears of $500 million shortfalls, adjustments to which run as high as an additional $500 million, it might be prudent to look at some numbers, especially since folks like NIT’s Christian Grantham are suggesting an Income Tax yet again.

Tax increases are generally justified by citing corresponding necessary increases in expenses. What justification exists for Tennessee’s skyrocketing budget? I understand things cost more over time. But 32% more? Has the cost of living in Tennessee increased 32% in 6 years? The Social Security Administration allowed Cost of Living Allowance increases averaging just 3.6% annually since 2002. Applied to to Tennessee’s budget that would have produced growth from $19 billion to just $22,200,588,000 for the same 6 years. Since Tennessee successfully raised the $28 billion for 2007’s expenses, had it also adopted SSA’s standards, the state would have spent more each year and still had a $5.8 billion surplus last year.

That’s $1,933 per person in the state’s labor force or almost $1,000 for every man, woman and child in Tennessee! Which makes Christian Grantham’s proposal convoluted and unnecessary. If the Governor would simply stop spending money like a drunken sailor, Tennesseans would automatically get tax cuts. Bredesen could double the SSA’s COLA rate in spending and we’d still have a surplus. If the state just lived within budget constraints Government imposes on many of its citizens, there would be no shortfall and we could reduce taxes across the board with real tax cuts. Failing that, at a minimum we could better afford the one thing Grantham proposes I do agree with, weaning Tennessee from its own Welfare reliance.

Christian Grantham proposes reducing our sales tax and adding an income tax because, in his words,

When state budgets are tied to consumer driven tax revenues, hard times can hit government services when they are needed the most … It would also provide the steady revenues the state needs for long-term financial stability rather than ebbing and flowing with consumer spending.

Not only does this ignore the Economic horror associated with having both an Income and a Sales tax, but it fails to realize problems inherent in consumer driven tax revenues apply to income driven tax revenues, too. He should consider what is happening right now in Michigan. This on the heels of Michigan Governor Jennifer Granholm (D) ramming a massive $1.6 billion tax increase down the throats of Michigan taxpayers last year. People don’t spend less in down times only because fears are fueling their decisions. Just as often people spend less because they are making less. Foolishly adding an income tax to generate revenue removes what little day-to-day control citizens have over their tax payments and means Government cares more about getting money for its purposes while refusing to consider the welfare of its citizens. If taxpayers don’t have extra money to spend on consumer items, they surely don’t have extra money to finance out of control Government expansion. It’s time to see Government sacrifice before asking citizens to do the same.

Grantham’s income tax idea may well be great for what he calls the “long term financial stability” of Tennessee. I’m more concerned with the long term financial stability of Tennesseans.

Blue Collar Muse