Capitol Hill Conversation – Luxury Tax Hits Business Investment, Meets Republican Opposition

Listen Now:

This week Governor Phil Bredesen is working out the details on his plan to start charging the full sales tax rate on goods over $3,200. Currently Tennessee consumers get a slight break on high-priced items. Bredesen wants to end that tax break to plug this year’s revenue shortfall that could reach $105 million and beyond. WPLN’s state capitol correspondent Joe White tells Blake Farmer who would be paying more.

 

WEB EXTRA

The sales tax rate on food is 5.5%, but all other tangible personal property, unless specifically exempted, is taxed by the state at a rate of 7%.

Tennessee cities and counties have the option of imposing an additional local option sales tax. In Nashville, the local option is
2.25%. In a cities such as Murfreesboro, the local option is the maximum allowed by the state – 2.75%. See a complete list by city here. (PDF file)

To deal with a budget crisis in 1999, the Tennessee legislature applied a state tax equal to the maximum local option on single-item purchases up to $3,200. That’s a total of 9.75% state sales tax on any item that costs between $1,600 and $3,200. After that point, goods are currently taxed at the state base of 7%.

Governor Phil Bredesen’s proposal would get rid of the $3,200 cap and tax the entire purchase, though it would still not apply to vehicles, boats and manufactured homes.

More: MP3 Direct Link

Please keep your community civil. Comments will be moderated prior to posting, and Nashville Public Radio reserves the right to approve them at its discretion. Comments containing links promoting goods, services - even noble organizations - will not be published. Your comments may include external links, but all comments with links will be delayed as they are reviewed. Comments containing profanity will be rejected.