A federal tax cut could possibly boost Tennessee's economy enough to
increase sales tax revenues, according to Matt Murray, an associate
professor of economics at the University of Tennessee.
A federal tax cut would encourage consumers living in the state of
Tennessee to spend more money, therefore increasing sales tax revenues to
the state, Murray said in a recent press release from the UT News
"A large, one-time tax cut would increase consumption and spending and
buoy the sales tax base," Murray said. "That would be of considerable help
to Tennessee's economy, which relies more heavily on sales tax than most
Republicans in the United States House of Representatives have proposed a
10-year $792 billion tax cut. However, a long-term tax cut may urge people
to save the extra money rather than spend it, Murray said.
"The same tax reduction over 10 years would have less impact on the
state's economy," Murray said. The long-term tax cut would also have less
of an effect on the U.S. economy, Murray said.
Many Tennesseans are not interested in a federal tax cut, said Bill Lyons,
a political science professor.
"Those proposing tax cuts are finding there is not a large Tennessee
constituency out there demanding a tax cut right now," Lyons said.
Tax cut might help Tennessee
Published: Sat Aug 21, 1999 | Modified: Sat Aug 06, 2005 01:54 p.m.