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Nashville’s Tax Break for Seniors Raises Questions of Fairness, Legality

2 min readBy: Gerald Prante

Nashville Mayor Bill Purcell is hoping that a half-cent sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. increase for the city on the ballot will pass this November. Why? In part, to transfer some of that money to the elderly in the form of taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. cuts on property, wheel, and sales tax. As today’s Nashville Tennessean explains:

Tax breaks for Nashville seniors — which Mayor Bill Purcell wants to fund with a half-cent sales tax increase — are being questioned by some who say they may not stand up in court even if the tax hike passes at the polls.

Members of the grass-roots group Tennessee Tax Revolt “are talking seriously” about challenging Purcell’s proposed elderly tax relief program on constitutional grounds, leader Ben Cunningham said. However, the group has not made a final decision on whether it will sue.

The mayor wants to give seniors breaks on sales, wheel and property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services. es using some of the $57.5 million that would be raised from a half-cent sales tax increase, which voters are casting ballots on now. That would increase Davidson County’s combined state and local sales tax rates to 9.75 cents on the dollar.

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Most likely, the mayor is seeking to prop up his vote total with the demographic that tends to actually show up at the polls—the elderly. And while most would agree with the basic unfairness of this proposal, one could question the recent prescription drug benefit passed by Congress and signed by the President on the same grounds. It essentially redistributes money from one age group to another, mainly for political reasons.

In reality, the elderly already receive an effective sales tax break compared to everyone else because businesses across Nashville commonly offer discounted prices on a range of goods to senior citizens. For every dollar of these discounts, retailers effectively lower the base at which the purchase is taxed, thus providing seniors with a roughly 9 cent tax break.