Tennessee collects state income tax on dividends and interest and all sorts of taxes on businesses, and of course, a huge chunk of its revenue comes from sales tax and license fees. It has one of the lower gas and cigarette taxes and pretty low property taxes, too. According to the US Census, Arkansas, Kentucky, Louisiana, Mississippi, and West Virginia are the only states with a lower median income than Tennessee, 2006-2007. The median income here during that time was $41,521. That’s not a lot of money. That means people in Tennessee are not rich, as a population. (Remember that’s only the median because half of the households make less.)
The problem with that is all the complaining about things like state healthcare, college tuition, and the like. Tennessee pays a lot in state employee wages and insurance benefits, and a ton on public welfare, one of their higher expenditures. To have that as a high expenditure in a state with one of the lowest median incomes, one of the highest sales taxes, and such a blindly immovable opposition to a state income tax doesn’t make a bit of sense. To have as a main revenue source something as dependent on the general state of the economy (or perception of it) as sales tax doesn’t make a bit of sense either. To live in a state with such close access to other states with lower sales taxes, when the people with the money can easily drive there to make large purchases (especially when the biggest Tennessee cities lack some really major, cool, high-priced stores you can find as close as Atlanta) doesn’t make a bit of sense. The people without the money, meanwhile, have to spend a huge chunk of their meager incomes on tax on food, clothing, and other general necessities, can’t afford to do enough shopping to really boost the revenue, and apparently frequently enough end up the recipients of the public welfare programs funded by what revenues the state does make.
It’s easy to see the block to a state income tax. The people with the influence, the people who vote, basically, are the people with the money, who benefit the most by not having that tax and having so much control over their vulnerability to the other taxes. The people without the money are trapped here, make paltry little money, have to spend so much of it to survive, are typically less educated, less motivated, etc, don’t vote in as great numbers, therefore have little influence and are guaranteed to never have any. There is a tall, wide, and solid wall here between the haves and have-nots, and the people on the have side like it that way, until they want to bitch about roads and schools and other things they don’t realize they’re costing resources.
I hate the sales tax, and I like balance, so I personally would like to see instituted a state income tax. The 2007 federal tax on that median $41,521 (taxable income, not even counting deductions and exemptions, filing single) was only $6725. That’s not exactly a killer. On the have-not side, say with a $20,000 taxable income, it’s only about $2700. No state income tax sounds great until you do have to come up with college tuition; make a $1000 repair to your car that costs $1100; there’s a serious recession when nobody shops and your state still has to pay for stuff like hospitals and welfare and emergencies and education; or all the roads need work and they raise the gas tax, especially when gas is already $3 or $4 a gallon. Chew on it.