Tennessee’s economy relies on sales tax, which is putting more burden on low

KNOXVILLE, Tenn. (WVLT) - Tennessee’s tax structure is designed to attract companies to the state by keeping business tax lower. Tennessee ranks 2nd in the nation in sales tax rate .

Michael Kofoed, an assistant professor of economics at the University of Tennessee’s Boyd Center for Business and Economic Research, said the state’s reliance on sales tax creates particular burdens for lower-income residents.

“One drawback of the sales tax is that lower income folks pay a higher proportion of their income to sales tax than upper income folks,” Kofoed said.

Tennessee depends on people spending part of their paychecks at restaurants and stores, but that spending has declined recently. Kofoed said consumers are becoming more cautious about major purchases.

“People are becoming a little mor