Low-Tax Tennessee

Tennessee, we were informed last week, has the lowest taxes of any state in the country. So, are we number one? Or are we number 50?

The news, such as it is, will be seen in different ways by different people. Proponents of a property-tax increase to pay for schools will say Memphis and Shelby County residents are not as overtaxed as some of them think they are. Opponents of higher property taxes and a proposed payroll tax -- or a state income tax -- will likely say Tennessee is in an admirable position and ought to do nothing to change that.

The low-tax honors mainly stem from Tennessee's lack of a state income tax. The benefits are greater for those in higher income brackets, and the burdens of the existing regressive system based on sales taxes are heaviest on the poor.

Property taxes vary widely from city to suburb in the Mid-South. Memphians pay the highest property taxes because they pay both Memphis and Shelby County levies. Suburbs have lower property-tax rates than Memphis.

In short, the low-tax tag makes for a snappy newspaper headline or attention-grabber on your Internet home page but may not be great policy. Taxing food and necessities for poor people is nothing to brag about, nor are per-pupil school expenditures well below the national average.

Charles Williamson, director of finance for the city of Memphis, says Memphis will be able to maintain its AA rating on its general obligation bonds "if we present a good plan and the rating agencies are persuaded that it will work." If not, Memphis will be looking at higher property taxes a year from now. And however you read that headline, an increase would not be the end of the world.•


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