And a Penny Now Ain't Nearly Worth What It Was The Year Franklin Died

Sean Braisted considers the few measly things that a half-cent decrease in sales tax on food can buy, thus showing that the bone Tennessee is throwing Tennesseans is of little help (can you even buy a literal bone for that kind of chump change?).

Thus, said Sean:

Frankly, I just don't see the point in reducing Government revenues simply to give back consumers more change to fall in between the sofa cushions. I know a penny saved is a penny earned, but I just can't imagine anyone other than the folks at the Treasury Department will ever notice the difference between the taxes in 2007 and 2008.

But a penny saved in 1790--the year the author of the aphorism Sean quotes died--was worth much more than it is now. Ben Franklin's penny saved should be adjusted to account for inflation on the current dollar:

In 2006, $0.01 from 1790 is worth:

$0.23 using the Consumer Price Index
$0.22 using the GDP deflator
$4.32 using the unskilled wage
$9.15 using the nominal GDP per capita
$698.34 using the relative share of GDP

So, the 4 bits that Tennessee is returning to Tennesseans for each of their $100 grocery bills in 2008 would be worth at least $11.00 (if not worth hundreds of dollars more) to the author of the penny-saved aphorism. Too bad we didn't receive the sales tax cut on 1790 terms.

In the meantime, let us conservatively split the difference on inflation and update Franklin: "25 bucks saved is 25 bucks earned." That puts the Tennessee tax cut in its proper minuscule perspective, because $25.00 off of each $100 grocery bill would make a real difference.