Taxing Issues: Single Article Cap

TAXING ISSUES: A SIX PART LOOK AT ISSUES THAT HINDER TENNESSEE’S ABILITY TO BE A JUST And PROGRESSIVE STATE.

Part V: What's a Single Article Cap?

In Tennessee, you pay less tax on this

Did you know that if you were to purchase a luxury yacht you would pay less in sales tax than someone who could only afford a dinky canoe? The same applies to someone who buys a $100 thousand dollars Maserati and someone who buys a $2,500 used car. Weird huh?

than this. 

The reason for this is something called the single article cap, which is a cap on local taxes. In Tennessee, depending on where you live, your sales tax is 9.25 to 9.75%. Now sales tax is comprised of two parts: the state portion which is 7% and the local option (also known as the single article) which is what goes to your local city or county and is the extra 2.25% to 2.75%  (depending on what county you live in).

Now, the local option has some quirks. The first $3,200 of any purchase is taxed at the normal rate, which is the state portion, 7% plus the local option 2.75% = 9.75% sales tax. After $3,200 the local option goes away and sales tax falls to just the state portion of 7%.

This is taxed LESS

than This! Whaaaaaaat?!

TFT doesn’t think that’s very fair (because it's not). Why should someone who can afford a fur coat pay less in sales tax than someone who can't? It isn’t fair and it doesn’t make sense.

These coats are taxed LESS

than this. Oy.  

TFT estimates that the state would generate an extra $100 million dollars a year just by eliminating the cap on the single article. TFT also advocates for a uniform rate except for the purchase of a vehicle priced under $10,000 and a mobile home that is used as a primary residence. We think that this would be so much fairer, rational, progressive and just the right thing to do.

What do you think?