Tennessee Governor Phil Bredesen’s proposed $21 million cable tax would be bad for taxpayers and economic growth in the state. Arguments that the state should raise taxes on cable consumers because satellite users do not receive the same exemption or that vital services are at risk are disingenuous and dangerous excuses for a tax hike.
First, if equity were truly the reason for the tax hike, the state would grant the same tax break to satellite users. The fact that the governor has been pushing for a tax hike instead of a tax cut shows this is nothing more than a money grab.
Second, although earmarking tax hikes for specific high-profile purposes, such as higher education or public safety, may make for good talking points, these budgeting gimmicks are often weakly implemented. Earmarked funds are all too often raided for other uses, or general fund revenues previously used to fund these expenditures are dumped into other government projects. These accounting gimmicks allow government to raise taxes and inflate government spending under the guise of funding “necessary” government services. If the state’s higher education system and public safety are in such great need of revenue, the state should cut money elsewhere or institute money-saving reforms.
Ultimately, the proposed tax hikes are nothing more than the governor trying to pick the pockets of struggling taxpayers in order to line the pockets of state government. Burdening taxpayers with higher taxes at this time would hurt the many families already suffering tight budgets because of the sluggish economy.
Legislators who really want to shore up essential services now and for the future must consider real reforms, not destructive tax gimmicks. Some options include setting sensible tax and expenditure limits, reforming the state workforce, privatizing non-core functions of government, and concentrating on the true functions of government.
John Nothdurft ([email protected]) is the budget and tax legislative specialist for The Heartland Institute.