The Automatic Tax Increase
A study of the cost of living in Tennessee by research economists at the University of Washington finds that a family of four that gets no government subsidies must earn $37,670 to make ends meet in Nashville-Davidson County, reports this story in today's Tennessean. Naturally, the study is being hyped as another reason we need a state income tax.

But under the income tax plan proposed by House Speaker Jimmy Naifeh, that family of four - let's call them the "Smiths" - would pay taxes on some of their income. A couple with two dependents, the first $33,000 of the Smith's income would be exempt (until a future legislature inevitably lowers the exemption). The Smiths would thus pay $210.15 more in taxes they don't currently pay.

Sure, they'd get a small and no-doubt temporary decrease in the sales tax on a very small portion of their grocery bill. But each year as the Smiths get cost-of-living raises to offset inflation, more of their income would be subject to the income tax.

After four years of 3-percent raises - with inflation running at about 3 percent - the Smiths' annual income would be $42,397, though their purchasing power would remain unchanged. But under the Naifeh plan, the Smiths would now make $9,397 in taxable income above the $33,000 exemption, and their tax bill would have doubled to $422.86.

An income tax would cost the Smiths - and most every other hard-working Tennessee taxpayer - progressively more each and every year even as peoples' paychecks grow but so does the cost of the basic necessities of life. That's a hidden tax increase that is driven by inflation and doesn't require legislators to risk public wrath by voting for a tax increase.

It is how an income tax - even a flat-rate income tax - funds the endless expansion of government.

And that's even if the legislature doesn't pass a "temporary" increase in the income tax rate "for the children."

But, hey, at least state government would have more money to spend. After filtering that money through the wasteful bureaucracy, it might even have some left to pay for giving the Smiths some sort of government benefit or subsidy. But many families like the Smiths would rather keep their own money and spend it they way they see fit, than have it taken away by a government and then used to make them dependent on that government.

Want to calculate the hidden tax increase Naifeh plans for you? First, subtract your exemption amount from your current income. For a single person, that's $15,000. It's $30,000 for a couple and $1,500 per dependent child. The remaining amount is your taxable income. Multiply it by .045 to get your tax bill.

Next, take your current income and multiply it by 1.03, simulating a 3 percent raise. Do that four more times to calculate your income five years from now. Subtract your exemption and then multiply the remaining amount by .045 to see your higher tax bill in the fifth year of the Naifeh plan.

A single person's $25,000 salary would rise to $28,981 in five years, and their tax bill would rise from $450 in the first year to $629 in year five.

Now you know why big-spending liberals like Naifeh and Sen. Bob Rochelle so desperately desire an income tax: because it raises people's taxes automatically.