Would you believe that something you don’t know about could cause problems for everyone? Well, as we enter summer months here in the South, the allergy sufferers reading this can relate. We may not be able to see the pollen and we certainly don’t know where all the allergens come from. Cats, trees, grass, fungal spores, and dogs seem to be just a few primary causes of the irritation. Oh, and bad government policy.
Speaking of irritation, how many of you have heard of the Business Tax? (Don’t all raise your hands at once.) As my colleague Ron Shultis so clearly explained in a recent blog post, “We’re all used to sales taxes when something is finally sold to consumers, but the Business Tax is on all transactions including business-to-business sales. So, when a product goes from a manufacturer to a jobber, wholesaler, and retailer, it is taxed at every level. This means the Business Tax creates a ‘pyramid effect’ due to the multiple layers of taxation, driving up the costs for businesses and ultimately prices for consumers.”
Despite not receiving much attention prior to this legislative session, the Business Tax causes more headaches than ragweed. In addition to raising costs at every stage of production for businesses, the Business Tax unfairly made people buying the finished product pay a “tax” in the form of a higher price simply because the business had to offset the increased cost of goods and production. In a time of already high inflation, this tax meant consumers were at best getting the same product for a higher cost, and at worst, lighting their money on fire.
After Beacon shone a light on this issue, the General Assembly adopted a reform that is both business-friendly and consumer-friendly. The revision raises a business’s exemption from the Business Tax from its first $10,000 in sales to $100,000. This frees a whopping 140,000 Tennessee small businesses from a hard-to-calculate tax that generates less than two percent of the state’s annual revenue. While not a complete repeal, this is a solid first step into making Tennessee a better place to live and do business for both businesses and consumers by reducing barriers on the business end and helping ease costs to the consumer. And that is nothing to sneeze at!