Future state income tax ban proposed
Posted: Thursday, January 12, 2012 1:25 pm
By: Bo Bradshaw, Tennessee News Service
Nashville – One item on the agenda as Tennessee lawmakers return to the State Capitol today (Tuesday) for the second session of the 107th General Assembly is a proposed amendment to the state constitution that would forever ban a state income tax.
It has already passed in the Senate, and that has some Tennesseans worried.
Dick Williams, a board member with Tennesseans for Fair Taxation, calls the amendment “irresponsible.” He says it will tie the hands of all future legislators, and prevent Tennessee from correcting what some see as a broken tax structure.
“If we continue to not have an income tax at all, other than the Hall tax, then we’re either going to have to keep continuing cutting, as we have been for several years, or you’re going to raise the sales tax.”
The Hall tax, which dates to 1929, is only on income from investment interest and dividends.
Tennesseans for Fair Taxation will gather at the War Memorial at Legislative Plaza on Tuesday at 9:45 to voice opposition to the proposed amendment. Williams believes the state risks financial ruin if an income tax ban is passed.
He says numerous studies have shown that an income tax could help stabilize state funding and be more fair to small business.
Bill Hagerty, commissioner of the Tennessee Department of Economic and Community Development, told a recent town hall meeting that states with income taxes that border Tennessee already offer more attractive incentives for companies looking to relocate.
“An extra tool that they can use that is a financial incentive to a company to locate across the border from Tennessee, and then that state turns around and rebates all or a portion of that income tax to the company for locating there.”
While tax revenue collections have increased, Tennessee still faces a shortfall of more than $300 million in 2012.
Tennesseans for Fair Taxation supports a tax reform package that would add a state income tax, but also lower the state sales tax, and end the tax on food and groceries in Tennessee.