This week, many of our senators and representatives are doing their best to pass a large, unnecessary, expensive, and unpopular tax bill, mostly as a favor to our Governor. As usual, Republicans who ran on promises of lower taxes are finding themselves pushing a large tax increase that will damage their constituents. Watching how they respond to this difficulty is very educational, and we should be watching closely when this bill reaches the House floor tonight.
Rather than oppose the bill, which was proposed by Governor Haslam and will add a substantial tax to all gasoline and diesel fuel sold in this state, many have engaged in all kinds of misdirection, chicanery, and nonsense to disguise the bill’s true purpose and intent. For example, last week the House Finance, Ways and Means Committee renamed the bill “The 2017 Tax Cut Act” even though it is the literal, exact, complete opposite of a tax cut.
The bill’s supporters have added and retracted various amendments at strategic times as it sped through its various committees, violated congressional procedure to expedite its passage, and done everything possible to force Republican support. At one point, for example, it contained a small property tax cut for some military veterans, until the CVA demanded that politicians stop using vets to guilt other reps into taxing non-vets.
The events surround this bill are so shady that the kindest and most complimentary thing that can be said about it is that it is completely and totally superfluous. After all, this is a bill to raise taxes when our state is enjoying a $2 Billion surplus, and it’s raising the tax to build roads when Tennessee is ranked second (or third, or fourth, depending on the study) in the nation on our road quality and infrastructure. Of course, some have argued that our $2 Billion surplus was collected for other things, and Tennessee is “too honest” a state to just reallocate that money as we see fit. This sounds like a good and noble argument… until you think about it.
What this statement is actually saying is that our politicians are “too honest” to wisely use or even return a wad of mistakenly-collected money, and will instead just take more money as they see fit. Apparently they are also “too honest” to ask why they should take money that they don’t need to increase spending in the one area where our state truly excels?
And, speaking of honest politicians, let us ask who benefits from this bill. There are so many conflicts of interest between this bill, its proponents, and its rapid passage through various committees that it is impossible to unwind the entire web. One hesitates to suggest actual corruption, but there are many coincidences and conveniences.
For example, the bill’s co-sponsor Rep. Barry Doss is, conveniently enough, a TDOT pre-qualified contractor whose construction company is likely to build some of the new roads this tax will pay for. Even more conveniently, he became Chairman of the Transportation Committee just in time to steamroller this bill over all opposition and all rules.
Also, defenders of the bill really like to cite an official study endorsing the Governor’s gas tax. This study was released by the Boyd Research Center, which is coincidentally named after Randy Boyd, Gov. Haslam’s former director of Economic and Community Development. The Boyd Research Center is, by another amazing coincidence, housed in the Haslam Business School.
Coincidentally, Governor Haslam is also part owner of the Pilot and Flying J gas station chain, which has over 650 locations. Pilot Flying J is the largest seller of terrestrial diesel fuel in the entire country and, conveniently enough, would almost certainly collect some of Haslam’s gas tax. What percentage of the tax they would collect, and how long they could earn interest on it it before remitting it to the state, is unclear. But it is still pretty convenient, especially for a Governor wanting to pass unpopular legislation in his last term.
So who is this bill inconvenient for? Well, anyone who buys gas in Tennessee, especially anyone who is involved in farming, lawn care, manufacturing, construction, transport, or anyone who buys any products from anyone who buys gas in Tennessee. Last week, I visited our Capitol to ask about this, and a TN rep assured me that the 2017 Tax Cut Act would offset this higher gas cost by reducing the current sales tax by 0.5% on groceries, thus actually providing more of a tax cut than a tax hike. However, he was referring only to “average families of four” and only what they would pay at the gas pump. This is pretty disingenuous.
If we cut sales tax on groceries by 0.5%, but increase the cost of shipping groceries to stores by about 5%, and the cost of producing food by approximately another 5%, cost of food will go up. So, food from-out-of state could be 4.5% more expensive, and locally-grown food could be as much as 9.5% more expensive. That’s right, this bill will seriously affect small Tennessee businesses, even more more than their out-of-state competitors.
Every shipment of materials that a Tennessee entrepreneur buys will have cost 5% more to ship in to this state, plus an additional 5% to ship to his shop if he buys from a local retailer. Every time a contractor starts a tractor or generator it will cost him 5% more to run. And of course, every time a manufacturer ships a completed product to a customer or store, there’s another 5% charge on shipping. This is all added cost before the 3% extra that the “average family of four” must spend to just get to that store. All these compounding increases can not possibly be offset by a 0.5% tax cut on a few grocery categories.
And more worrisome than the gas tax itself is the attitude behind it. It’s true that a mere 7 cents extra per gallon is not going to drive away existing companies that already have sunk costs in the state (especially those large companies that are already friendly with Haslam and already get special exemptions). However, the attitude behind this gas tax is something that could repel businesses that were planning on building long-term operations in this state.
It is painfully clear that everyone in the capital knows that this is a bill that will be bad for Tennesseans, and Tennessee overall. The sheer haste in trying to pass it, the bullying of legislators who balked at the new party line, the attempts to avoid attention, the dodges with amendments and renaming attempts once people began to notice, the bald-faced lies about what Tennessee taxes already are… all of these things demonstrate that even its supporters are ashamed of it.
This is a bill that will benefit our Governor’s private business interests and the few politicians that can leverage them. Everybody else will pay for it, at more places than the gas pump, and in more ways than we can foresee.
If you live in Tennessee, contact your Representatives and Senators today, before they vote on this bill tonight. Let them know that you are disturbed by this bill, but that you are even more disturbed by the way that it is being handled, spun, cloaked, lied about, rebranded, and forced through committees without being truly discussed.