Taxing Tennesee
Taxes and Facts.

By John J. Miller & Ramesh Ponnuru
August 24, 2001 11:30 a.m.

avid Firestone's front-page story in yesterday's New York Times told the story of how Tennessee's pigheaded refusal to enact an income tax had gotten it into a fiscal crisis ("Fiscal Stature of Tennesse Slumps in War over Taxes"). The horrible consequences of this crisis are detailed: rising tuition at state schools, mental-health programs "slashed," schools worried "about finding money for building projects." Sources are quoted fretting that Tennessee is going to become "like Alabama." A chart ranks Tennessee forty-eighth among states in per-capita tax payments.

What Firestone didn't mention is how fast the state government's spending has grown. According to the Tennessee Institute of Public Policy, it's up 9.7 percent over the last year — following a 10.4 percent increase the year before. This is not the portrait of a fiscal anorexic.

Firestone does allude to this growth, but only to report that most of it was caused by federal mandates or court orders and thus was out of the state government's control. According to TIPP, however, the biggest budget-buster over the last ten years has been Tenncare, the state's experiment in socialized medicine. Even with federal help, covering 25 percent of the state's population gets expensive. The second fastest growing item is education. Tennessee doesn't need an income tax to solve its fiscal problems; it needs politicians willing to put the budget on a diet.