Many Memphians reacted to the Memphis City Council’s recent hikes on taxes and fees with one question: Why are residents getting charged more while we hand out tax cuts to businesses all the time? Daniel Duckworth took this question to Nextdoor.
“Shelby County raised the wheel tax in hopes of bringing in $17 million,” he wrote. “In the meantime, businesses got $41 million in tax breaks in the county. We’re giving large businesses and corporations welfare and guaranteed income.”
Jay Limbaugh said, “The Memphis market is not as attractive as Nashville or Knoxville. We have to bribe companies to come and invest. Simple.”
Some suggested we have to use corporate handouts because our labor pool sucks. Other neighbors wondered if the city could save money with a consolidated government, like Nashville. One just wanted her yard waste picked up on time.
Nice
Posted to YouTube by Adam and Madalyn
Amid the death and destruction you’ll find if you ever search YouTube for “Memphis,” you also occasionally find just some really nice love letters to the city from outsiders. Travel vloggers Adam and Madalyn visited recently; ate barbecue at Cozy Corner, Central BBQ, and The Bar-B-Q Shop; and wandered around Bass Pro and Beale Street. If you need a refresh on the city, check it out.
Credit: vepar5 | Adobe Stock and University of Memphis
Our cover story this week looks at issues stoking the embers of class struggles in Tennessee.
School vouchers, flagging revenues, and even that brief “tax holiday” on groceries have some wondering for whom does the state’s Republican-dominated government work?
State revenues will flatten this year, according to experts, after years of increases. This is thanks, in large part, to big tax breaks the legislature approved for business owners last year.
This “business-friendly” policy framework, which cuts taxes for the business class in hopes of prosperity for everyone, found harsh critics in economists with the national Economic Policy Institute.
Elena Delavega is a professor at the University of Memphis, a Memphis poverty expert, and co-author of the annual Memphis Poverty Fact Sheet, along with Gregory M. Blumenthal. She said the low-tax system does not work for everyone and stymies investments in cities. Here’s what she told us in a recent interview. — Toby Sells
(This interview has been edited for clarity.)
Memphis Flyer: Does this “business-friendly” economic system work for everyone?
Elena Delavega: It may help two or three people at the very top, but it ends up hurting everybody else by denying the investment in the community that would make it a livable community, that would attract people who can have a choice [of a place to live].
So, it’s sort of like this downward spiral. We don’t invest and then become even less attractive. Then, we cut taxes. Then, there is less money for investment. We cut more taxes and so on.
So, that’s a no.
No, it doesn’t because in the end, these companies come, take advantage of the tax breaks for a little while, and then leave. We’ve observed this again, and again, and again.
In the end, if companies cannot attract people to work for them — if we cannot attract highly educated people and we’re not funding schools to the degree we need to educate people that can be hired by those companies — the low wages and cutting taxes [system] is actually a myth.
You can cut as much as you can, but unless you find ways to make more money, it really is a fallacy. So, what ends up happening is companies cannot attract people to move here. They also cannot hire people, and they leave. Or, people are not interested because there are no amenities and the only way to do that is to actually have higher taxes.
How does this all affect our poverty situation?
It’s the policies at the top that end up creating inequality and poverty, but they hurt everyone.
You shoot yourself in the foot because abandoned areas become not interesting to businesses. So we’re here begging, “Oh my god, let’s help businesses.” But businesses are choosing to go out to cities that provide good amenities, good schools, good roads, but also good theaters, good parks, good museums because these are the things that people find interesting and where those with money want to live.
You’re then able to attract businesses not by getting yourself naked and taking off your clothes in the middle of the road, but by actually having an attractive city. Then, the money is going to come. You’re not having to cut your tax base. The money is now sufficient.
You also need to have a middle class to support your businesses. You can put tons of money on the three people at the top, but the reality is … can they drink — what? — 365 cups of coffee in a year?
But if you have 200,000 adults that are able to buy a cup of coffee once a day or going to a restaurant once a week or twice a week … now you have the people who can actually support [businesses]. If you don’t have people able to support your businesses, your economy is going to go on a downward spiral.
When you put the money in the hands of the very few at the top, what you have is a feudal system. It has a bunch of servants at the bottom who cannot afford to have anything and three very wealthy people at the top, who cannot support all the other businesses.
If you put the money in the hands of those at the bottom … if you raised the minimum wage … that would be a fantastic way [to boost the economy] because now people at the bottom are able to all go buy shoes and all go buy coffee and all go to restaurants. So, the money starts circulating and what you have is an upward spiral that really lifts all boats.
Credit: vepar5 | Adobe Stock and State of Tennessee
Credit: vepar5 | Adobe Stock and State of Tennessee
Our cover story this week looks at issues stoking the embers of class struggles in Tennessee.
School vouchers, flagging revenues, and even that brief “tax holiday” on groceries have some wondering for whom does the state’s Republican-dominated government work?
State revenues will flatten this year, according to experts, after years of increases. This is thanks, in large part, to big tax breaks the legislature approved for business owners last year.
This “business-friendly” policy framework, which cuts taxes for the business class in hopes of prosperity for everyone, found harsh critics in economists with the national Economic Policy Institute.
Another harsh critic of Tennessee’s version is Memphis state Sen. London Lamar. Here’s what she told us in a recent interview. — Toby Sells
(This interview has been edited for clarity.)
Memphis Flyer:Does Tennessee economic policy work for most folks in Tennessee?
Sen. London Lamar: Our tax policy is incentivizing businesses for keeping people poor.
I say that because when you think about since 2011 and when the Republicans got in office, the main tax reform and benefits have truly benefited the wealthy and big corporations.
When you look back since 2011 … think about it. You had a repeal of the millionaire estate tax. You have a repeal of the luxury gift tax. A repeal of income taxes on stocks and bonds. A reduction of the jet fuel tax. Corporate exemptions to the sales tax and exemptions for corporate income tax.
So, all of these major policy reforms around taxation have all been policies to benefit corporations and rich people. So the question is, where are the priorities for those citizens who are working the hardest to contribute to our economy?
If we are really about seeing … everybody being able to elevate their economic status, then you would demand that there be a set minimum wage, understanding the cost of housing inflation, taking into account people who have children and families they got to feed, the cost of housing, rent, being able to be approved for housing loans based on income. You got to think about that and setting a basic living standard where people can know they can go to work and be able to feed themselves.
Secondly, I just feel like if Tennessee wanted to see equity in the system, they would demand a minimum wage because everybody improves in my opinion, not only Black and brown communities, but everybody.
But because there’s so few regulations on what business have to pay, and the hiring practices — this is a right-to-fire state or a right-to-work state, basically — I think that our policies don’t reflect the values of trying to create an equitable workplace. The data show you that when these policies are not in place, Black people and brown people are suffering the most.
As someone who’s living in Memphis, Tennessee — that’s predominantly African American — you can look at our school system where half our kids are living below the poverty line, and the state of housing, and just the livelihood and the economic status of Black people in our city that is actually affected by it. It’s sad and it should be a crime.
I don’t think Tennessee is oblivious to its impact on which communities [it affects the most]. Again, I think they’re incentivizing businesses to keep people poor, knowing that Black and brown people are going to be at the brunt of that.
When you think of businesses in Memphis, they’re like warehouse jobs … and temp services that people have to rely on. That’s where where a large population of Black people are working at. But they’re paying them [minimum wage]. $15 an hour is still really not affordable, to be honest, if they’re getting that.
Because they’re temp workers, are they getting healthcare services? No. Getting healthcare off the marketplace is still really expensive. So, these people are going without healthcare services, making probably nothing, and they have to work 16 to 17 hour shifts just to make sure they can meet ends meet.
Then what does that lead to? Them not being able to watch their kids. And those other kids that’s getting in trouble out here in Memphis streets.
So, how we are building our economic base in Tennessee and the South is perpetrating a continuous system of poverty for Black and brown people? There’s not another study that needs to be shown that this is going to be the result. It’s just a matter of our politicians deciding to continue to reinforce this system or change their policies.
Rank-and-file taxpayers got a temporary reprieve from grocery taxes last year. But they went right back on the books while those businesses taxes were made permanent. What do you think about that?
Again, it’s about policy priorities. You know that grocery tax will help middle, working, and poor-class families tremendously. That loss of money could be made up if we kept many of these tax decisions in place that we had previously, right?
So, you can’t say that you don’t have no money. We could have had the money, but you decided to break off corporations and rich people over being able to sit here and put in a tax policy that supports the lower, working class.
This study says economic policies like there are “rooted in racism.” What do you think about that?
I do think it’s rooted in racism. As long as Black and brown people aren’t economically viable, then they don’t have really any impact politically. You can look at that in the campaign funding of Black candidates in Tennessee. We’re funded far less than Republican white folks, even white Democrats. As long as our community stays poor, then we can’t compete against rich people who have the ability, access, and resources to play in a political game in a real way.
I think this system of racism is reinforced through classism. As long as you keep people of color poor, other white folks get to stay on top. This, more than likely, correlates to who owns the most businesses that are doing well. Who owns the corporations? What’s the income makeup of policymakers and people that they’re voting to benefit? So, you can look at all those things, not just the economics side. It’s racism that is rooted in the whole system.
Anything I left out or that you’d like to add?
I want to challenge business owners and stakeholders and people of influence in the system to ask themselves, “Do you want to keep the status quo? Or, do you want to start putting us on the path for better?”
Tennessee Republicans maimed (and likely killed) bills this session that would have allowed state taxpayers to know which corporations pay no state corporate income taxes.
The bills were carried by Nashville Democrats Sen. Heidi Campbell and Rep. John Ray Clemmons. Each bill got brief hearings this month. Both passed committee votes and both got negative recommendations from a majority of lawmakers on those committees.
Campbell and Clemmons said the Tennessee Department of Revenue (TDOR) told them more than 60 percent of corporations here pay no state income tax, and “that is jarring to hear,” Campbell said. About 27 percent of Tennessee companies that report more than $1 billion in taxable income to the federal government paid zero Tennessee income taxes, she said.
“We don’t know which companies are paying nothing because the state law shields that information from public view.”
Sen. Heidi Campbell
“We don’t know which companies are paying nothing because the state law shields that information from public view,” Campbell said. “This bill will require publicly traded companies to report what they pay or don’t pay to the public. So, we can better understand how our current tax code is working.”
Clemmons said that, according to a report from the D.C.-based Institute on Taxation and Economic Policy, three Tennessee companies paid no federal taxes in 2020: FedEx Corporation, Franklin-based hospital operator Community Health Systems, and Chattanooga-based insurance company Unum Group. However, current state law does not allow the public to know if these companies paid any Tennessee taxes.
Institute on Taxation and Economic Policy
Clemmons said Tennessee has the second-highest sales tax in the country and is one of only a few states that taxes groceries. Sales and use taxes were the biggest chunk of the state’s 2022 budget, comprising more than 61 percent ($12.8 billion) of the budget, according to the TDOR. Clemmons called these “regressive taxes paid by working families.” Franchise and excise taxes (corporate income taxes) were second, making up more than 21 percent ($4.5 billion) of the budget.
Tennessee Department of Revenue
“There are no loopholes for families buying groceries,” Clemmons said. “There are no loopholes for parents buying back-to-school clothes. There are no loopholes for property owners paying higher rates to make up for corporations [that are] not paying a dime.
“This bill does not raise taxes on anyone. It simply provides some transparency so the hardworking people of Tennessee, who pay their taxes, will know which big corporations are paying what they owe and which are not.”
Institute on Taxation and Economic Policy
Rep. Sabi Kumar (R-Springfield) said, “The implication that those who don’t pay taxes are not paying their fair share is a rather subjective matter.” He said a corporation’s responsibility is to “pay as little tax as they can following the law.” With this, Kumar said, “The problem is with the law, not with the fact that just because somebody does not pay taxes are doing something wrong.”
A corporation’s responsibility is to “pay as little tax as they can following the law.”
Rep. Sabi Kumar
“So, I would like to say that as a pro-business state, we need to realize it is okay to pay the legal share [of taxes], not the fair share as defined by somebody and that interpretation differs with everybody.”
The information sought by the bills is disclosed on the federal level, required by the U.S. Securities and Exchange Commission (SEC), according to a 2022 report from the D.C.-based Economic Policy Institute. But the SEC does not require the data on state taxes.
“The failure to require corporations to disclose their taxes allows them to unfairly avoid public scrutiny when they avoid paying billions in taxes,” reads the report. “Without information on how much corporations actually pay at the state and local levels, there is no way to determine whether or not they are paying their fair share.”
The modern U.S. income tax began in 1913, and at first it was very simple. Since then, virtually every congress and administration has layered on additional complexity to the point that the tax code is thousands of pages long and no one person can be expected to be competent in every nuance of tax.
As your income and assets grow, tax planning is more and more important. Consulting an expert is almost always a good idea, but here are three general concepts that cover a lot of ground when it comes to working through this complexity via personal tax planning.
Tax advantaged saving
Depending on income, employment status, and employee benefits, there are various tax-advantaged ways to save. Things like 401(k) plans, 403(b) plans, traditional and Roth IRAs, and HSAs are all potentially advantageous from a tax perspective. Generally, they either allow you to exclude money from your taxable income (to save taxes today) or allow you to pay taxes now but let the money grow tax free (so you can save on taxes in the future). Every situation is different, but it is likely in your best interest to max out these types of programs, even if you feel like you have “too much” money locked away in IRAs, or even if you want to retire early. There are many ways to access retirement accounts early, such as the rule of 55, Substantially Equal Periodic Payments, or Roth Conversion Ladders.
Roth Conversions
In traditional IRAs or 401(k)s, the money going in is not taxed but any eventual withdrawals are taxed like ordinary income. With “Roth” accounts, the money going in is fully taxed but then any eventual distributions are generally tax free. There is a way to convert traditional money to Roth at any time — you just have to treat the money converted as though it’s income which is taxed. Usually, it’s best to defer taxes as long as possible, but in some cases it makes sense to take the hit and pay taxes early. If you plot a typical person’s lifetime tax paid, it is U-shaped — income and therefore taxes paid are higher while working, get lower after retirement, and then rise later in life when required minimum distributions create taxable income. It can make sense to do Roth conversions during those low tax years just after retirement when you’re likely in a low tax bracket.
Charitable giving strategies
Most people become more charitably inclined as they age, and understand the tax benefits that giving can bring. There are a number of strategies that can make doing good do even better when it comes to your tax liability. Donor Advised Funds are a way to move money to an account and take the full deduction at the time of the gift. You can never take back the gift, but you can continue to control it in the sense that the money can stay invested and can be donated over time to the charities of your choice. This lets donors take a larger deduction in certain high-tax times, so gifting can be bunched up and then used over multiple years in the future. Later in life, Qualified Charitable Distributions (QCDs) can be made directly from IRAs to charity to meet RMD requirements.
Conclusion
These concepts are only the beginning of a comprehensive tax plan, especially if your income and assets are large. While these ideas are a good start, there’s no substitute for real advice from tax professionals and financial advisors. We all have a responsibility to pay our taxes, but there’s no reason to ignore the opportunities afforded by the tax code when planning for your future — and it’s never too early to begin!
Gene Gard is Chief Investment Officer at Telarray, a Memphis-based wealth management firm that helps families navigate investment, tax, estate, and retirement decisions. Ask him your questions or schedule an objective, no-pressure portfolio review at letstalk@telarrayadvisors.com. Sign up for the next free online seminar on the Events tab at telarrayadvisors.com.
Rancher: My taxes go to support welfare mothers and I work for a living. It’s not fair.
Fact-check: First, thank you for your hard work. In truth, however, just eight percent of our income taxes go to the social safety net for people in poverty and many of the recipients are poor rural working folks. And let’s be fair, farm subsidies, including cattle ranchers, could be considered another form of welfare, that is, pay for no work in many cases, given out in massive amounts above and beyond any other administration by Trump, seemingly to consolidate support from rural voters.
Senior citizen: My taxes go to support education but my kids are all adults. Why should my taxes support other people’s kids?
Young single person with no kids: My objection exactly!
Married couple without children: We decided not to have kids, so this is our protest too.
Fact-check: Fair enough. I suppose we could eliminate education from the federal budget. That would lower your income taxes by approximately three percent. While we are at it, perhaps we should eliminate the portion of the taxes that go to things many people never use? There are millions of Americans who oppose vaccines, so perhaps no funding for them. Millions of Americans do not fly, so why make them pay for the Federal Aviation Administration’s $18 billion? We could go on …
Veteran: I served, so why should I pay taxes when others didn’t serve?
Fact-check: Good question. We do have to acknowledge that the military budget is huge, by far the largest government agency funded by our income taxes, with about 22 percent of your tax dollars paying for the current military and another 15 percent paying for a combination of the national debt due to military spending and veterans’ benefits. And others serve as well, wouldn’t you agree? The dangers you faced were terrible, as shown by the 18,571 active duty military who died between 2006-2021. Domestically, those numbers are only rivaled by delivery drivers, although in terms of fatalities per 100,000 workers, loggers have a far more dangerous job than military members or police.
Jeff Bezos: I don’t personally pay taxes, hahahaha.
Fact-check: Yeah, the rest of us underwrite your lavish lifestyle. Across the board, the very wealthy pay just 8.2 percent income taxes, but Jeff, we know you’re trying to humble brag about your amazing scam, so we looked into it and you paid a bit less than one percent tax rate, not zero. Of course the average taxpayer, whose income actually decreased during the last portion of the Trump years, is stuck at around 14 percent, nearly double what most rich people pay.
Right-to-Lifer: I object to my taxes being used to slaughter babies.
Fact-check: Well, again, fair point. In this case, to remedy that objection, we would need to eliminate the Pentagon budget. The civilians, including babies, killed by U.S. military actions in the Global War on Terror amount to at least 387,000 people, and that doesn’t count the civilians killed by other militaries we subsidize and supply, such as Saudi Arabia and Israel.
Okay, I know everyone’s happy now! Get back to work! Dr. Tom H. Hastings is Coördinator of Conflict Resolution BA/BS degree programs and certificates at Portland State University, PeaceVoice Senior Editor, and on occasion an expert witness for the defense of civil resisters in court.
With tons of Juneteenth celebrations on the horizon for Memphis this weekend, a national group of Black conservative leaders want a halt to make the day a national holiday.
2019 Memphis Juneteenth Urban Music Festival (Credit: Michael Donahue)
Project 21, “the leading voice of Black conservatives for over 25 years” and sponsored by the D.C.-based National Center for Public Policy Research, said making Juneteenth a national holiday could further divide Americans.
"As Americans, we celebrate our national independence on the #FourthofJuly," writes P21's Emery McClendon.
”I constantly hear everyone taking about unity, but would a federal holiday end up being a unifier?” Project 21 member Marie Fischer asked in a news release. “Or, would it give fuel to those who support critical race theory by pointing out a day that marks one group as an oppressor and another as the oppressed?
“Such a holiday could be easily hijacked by those who insist that Blacks only advance when it benefits white elites. Nothing seems to get pushed these days unless it fits a specific narrative.”
A birthday poster
(Credit: State of Tennessee)
Tennessee is readying to celebrate 225 years of statehood, and posters for each of the state’s three Grand Divisions were unveiled Thursday.
Posters for each Grand Division feature music and a musical instrument. Middle Tennessee (home of Nashville) got an acoustic guitar. East Tennessee (birthplace of country music) got a fiddle. West Tennessee got an electric guitar that looks much like Lucille, B.B. King’s famous six-string.
The West Tennessee poster also features a Stax album bursting with sun rays, looking like those from Sun Studios in an interesting mash-up. West Tennessee also got a big river, river boats, a plow, and some grain, noting the region’s rich agricultural history, and a bald cypress tree.
(Credit: State of Tennessee)
Not too bad for state leaders. If you believe the standard Tennessee license plate, you’d think it’s completely covered by the Smokey Mountains.
Tax coffers runneth over (by $432M)
Tennessee tax coffers were fuller than expected for the month of May.
May tax revenues were $1.6 billion, according to Tennessee Department of Finance and Administration Commissioner Butch Eley. That figure is $432 million more than estimates. State tax revenues were $587.3 million more than May 2020 and the overall growth rate was 59.8 percent.
“Just as April tax revenue receipts revealed substantial growth, May state tax revenues continue to reflect extraordinary increases compared to this same time last year when most economic activity was weakened because of the pandemic,” Eley said. “When comparing May 2021 tax growth to May 2019, the monthly growth is 34.5 percent rather than the 59.8 percent growth over May 2020.”
Sales tax revenue grew across all industries, except for groceries and food stores, which saw slight reductions.
Tourism/hospitality jobs: we got ’em
State leaders are hoping to help attract workers to the state’s tourism sector, the second-largest industry in Tennessee.
The “Come Work, Come Play” campaign launched this week by the Tennessee Department of Tourist Development and HospitalityTN. It “urges prospective employees to consider hospitality jobs for their flexible hours, career advancement opportunities, and strong sense of community.”
(Credit: State of Tennessee)
“Tens of thousands of Tennesseans lost their jobs during the pandemic and the leisure and hospitality industry was hit the hardest, accounting for 72.3 percent of net jobs lost in the state over 2019,” according to the Tennessee Department of Labor and Workforce Development. Tennessee’s leisure and hospitality industry added 9,100 jobs in April 2021.
In Tennessee, sales of building materials and groceries were up last month while retailers, restaurants, and bars continued to see declines.
In all, though, Tennessee tax revenues in August were higher than they were a year ago, buoyed by federal stimulus funds, according to to Tennessee Finance and Administration Commissioner Butch Eley. August revenues were $1.2 billion, he said. The figure is up $22 million over August 2019 and $115.1 million more than budget estimates.
“Consumer activity for the month of July, reflected in August’s sales tax receipts, continued to outperform expectations as federal stimulus resources remained a large part of the state’s strong performance,” Eley said in a statement. “While tax receipts from building material suppliers, food stores, furniture, and home appliance retailers have increased significantly compared to last year, apparel stores, many small retailers, restaurants, and bars continue to experience losses due to decreased sales activity.”
August marked the first month of the state’s new fiscal year. Eley said his office will “remain cautiously optimistic” but will “continue to monitor economic activity and revenue trends to ensure fiscal stability.”
Here are some other points of interest from the August report:
• General fund revenues were $108.6 million more than the August estimate. The four other funds that share in state tax revenues were $6.5 million more than the estimates.
• Sales tax revenues were $103 million more than the estimate for August. The August growth rate was 3.83 percent.
• Gasoline and motor fuel revenues decreased by 7.75 percent from August of 2019 and were $2.3 million less than the budgeted estimate of $103.4 million.
• Business tax revenues were $1 million less than the August estimate of $9 million.
• Tobacco tax revenues for the month were less than budgeted estimates by $1 million.
• Motor vehicle registration revenues were $4 million more than the August estimate of $26.4 million.
Airbnb said Monday it has nearly doubled the expected tax revenues for Tennessee in its first full year here.
Airbnb, the home-sharing tech company, announced an agreement with the Tennessee Department of Revenue in January 2018. The agreement allowed Airbnb to collect and remit taxes to the state and local governments.
When the agreement took effect in March 2018, the company projected it would bring $13 million in annual revenue for the state. Airbnb announced Monday it brought in a total of $22.4 million to state coffers.
“This tax agreement is allowing our hosts and platform to deliver revenue and economic activity to rural parts of Tennessee that lack traditional hospitality options,” said Laura Spanjian, Airbnb’s senior policy director. “We hope to build on this economic impact in year two.”
Airbnb also has agreements with Memphis, Knoxville, and Hamilton County (Chattanooga), to collect and remit local occupancy taxes for their hosts.
In 2018, Airbnb hosts in Tennessee welcomed more than 1.4 million guests.
Airbnb claims its service has complemented, rather than competed with, Tennessee’s hotel industry. A news release from the company said Airbnb expands lodging capacity in cities during large events, like college football in Knoxville, the Tri-Cities area during NASCAR events, and the Memphis in May festival season.
The most egregious fallacy of our time is the idea — one repeated endlessly in this and any other election year — that the key to economic development — the creation of business and the movement of people — is lower taxes. Despite numerous experiments with the idea, in Washington and a number of states, including Arkansas, it almost never works out that way and often makes things worse, as we have seen recently in Louisiana, Kansas, West Virginia, and Oklahoma.
The other day, I pulled my dusty copy of Accelerating Economic Growth in Arkansas off the shelf. It had been 50 years since I studied the 186-page tome, written in 1964 by the Arkansas Economic Expansion Study Commission, a blue-ribbon group of 11 conservative businessmen and a country lawyer who were commissioned by the legislature and the governor to find out why Arkansas lagged far behind other states in economic growth and what to do about it. The commission was staffed by the University of Arkansas College of Business (this was before Walmart bought it) and economists at the Industrial Research and Extension Center.
Here is what they concluded about taxes: The level of state and local taxes are never a significant factor in neither where a company locates nor where people choose to live. They cited economic research plus common sense. Arkansas had always been at the bottom or near it in state and local taxes but had suffered net outmigration for most of the century and benefited little from the movement of industry to the Sun Belt. Industry often located in states with higher taxes, they said, because low taxes “may indicate a low level of the community’s services [including well-educated people] that are necessary for industry to be profitable and successful.”
They suggested much greater use of personal and corporate income taxes at the state level and wider authority for cities, counties, and schools to raise property taxes and levy new forms of taxes. The state lagged far behind in education, public health, and transportation, and the state had to invest heavily in those services if it were to ever to prosper.
Most of the book was devoted to raising the educational achievement of people. A few of its recommendations were adopted in the next two decades, including a system of community colleges and technical schools.
“We cannot advance economically without the leadership of education,” the study concluded. “We, therefore, call for the highest priority in the commitment of public and private support to our education system.” It recommended that 90 percent of general revenues above $127 million each year be earmarked for public schools, colleges, and technical schools. The state was dedicating a little more than 50 percent of general revenues for education. Now, it is far less.
Yes, they invoked a founding father, the Virginian Thomas Jefferson:
“Preach, my dear Sir, a crusade against ignorance; establish and improve the law for educating the common people. Let our countrymen know that . . . the tax that will be paid for this purpose is not more than the thousandth part of what will be paid … if we leave the people in ignorance.”
The report scoffed at the popular excuse that spending a lot of money on education was futile, partly because it would take many years to bear fruit.
One man who took the report to heart was Winthrop Rockefeller, who as head of the new state Industrial Development Commission, had been responsible for such development as the state had experienced the past decade — a bunch of cut-and-sew and other factories that paid minimum wage. He ran for governor four times to implement the study’s solutions: a raft of tax increases to upgrade education and health care, the latter by taking advantage of the new federal Medicaid law. He had given his own money to build a new school in the nearby town of Morrilton and a medical clinic in the hamlet of Perryville. The heavily Democratic (132 to 3) legislature defeated all his taxes, in a regular session and again at a special session. His income tax bill would have raised the top rate from 5 to 12 percent for rich men like him.
He left office in 1971 in bitter defeat, remorseful that he had failed to deliver his goal of transforming his adopted state into an educated and prosperous populace.
Now, nearly every politician’s dream is to cast votes to cut taxes, the more the better. It is an end unto itself.
Ernest Dumas is a longtime political writer and columnist, whose work is featured in the Arkansas Times. This essay is adapted from his most recent column there.
Kroger.com 
Airbnb/Facebook