Maybe this will help you decide how to vote tomorrow, if you haven’t visited the county clerk’s office already. There’s a lot that backers of Amendment 5 have kept from you as they hold up Tennessee as a utopian land of no income tax.
Although we’ve been told we won’t be paying sales taxes on all kinds of things, here is what your Tennessee friends and relatives pay extra for. We thank Madras Accountancy for this information.
The basic state sales tax rate is 7 percent. Our state rate now is 4.225. Local sales taxes are allowed for another 2.75%. Citing the Tax Foundation, Madras says the rate applies to clothing, furniture, electronics, restaurant meals or other prepared foods, some digital products, motor vehicle purchase—familiar to us. However:
A sales tax also is applied to gasoline and fuel products. We don’t do that unless you buy a can of oil, for example.
Groceries are taxed, although at four percent—including the rotisserie chicken, deli meals, candy and sugary snacks, soft and energy drinks, dietary supplements.
If you download or stream things, you’re likely to be charged a sales tax in Tennessee for such things as e-books and digital text books, downloadable music and movies, streaming subscriptions if the provider had an office in the state; computer software downloads and licenses, cloud-based software and SaaS platforms.
What’s exempt in Tennessee—
Prescription drugs and insulin, medical devices and durable medical equipment—such things as oxygen tanks and wheelchairs, farm equipment and agricultural supplies, some textbooks, machinery used in manufacturing or processing, and things you’re going to resell.
Services charge sales taxes. Car repairs and replacement parts, appliance servicing, extended warranties and service contracts, pre-written software (including cloud-based tools), internet and telecommunications services, lodging and short-term rentals, as well as parking services and storage units.
We have a lot of special district taxes or specific taxes for such things as conservation, soil conservation efforts, state parks, police and fire safety, etc., that will continue because they’re part of the state constitution. All of those will add to the basic state tax.
Supporters also talk of lowering property taxes—-which are the life blood of our schools, local roads and bridges, and city and county governments (do you know that two cents of your property taxes are earmarked for the state blind pension fund?).
No income tax and lowered property taxes sound good but we could be setting ourselves up for some difficult financial times if we buy the simplistic campaign arguments of supporters of Amendment 5.
As mentioned earlier—-we shouldn’t want to be Tennessee, nice as it is to visit. We should expect our leaders to show us how we can be something better than 34th or lower.