May 7, 2004

Bredesen Administration Twists Truth To Get Tax Increase

NASHVILLE - Tennessee Gov. Phil Bredesen is so desperate to pass a $75 million tax increase on Tennessee businesses that he called in some high-powered lobbyists to lobby state House members for passage of an unconstitutional bill Thursday, according to my legislative correspondent who shall remain nameless.

The HobbsOnline correspondent, my eyes and ears at the state legislature, reports on how the administration twisted the truth to convince legislators to vote for House Bill 3529, which "decouples" Tennessee's excise tax depreciation schedule from federal business tax depreciation laws and will result in Tennessee business that get a tax cut from the federal government turning around and paying more in state taxes:

The constitutionality issue got swept under the rug pretty fast and [Rep. Frank] Buck ended up voting for the bill. The Department circulated an opinion, not from the AG, but their own that said it was constitutional.

The administration got very worried a couple of hours before the vote so they enlisted the help of a couple of high-powered lobbyists to help them pitch the bill. They were actually telling members that the business community WANTED the bill to pass. They could get away with saying that some businesses were ambivalent about it - which some were because they don't want to lose worker's comp reform. But to say that business wanted it is beyond the pale.

The torrid pace that they were getting members out of the chamber to pitch the bill was a sight. It was unlike anything I'd seen.

I'll be working Friday to secure a copy of this sham "opinion" on the bill's constitutionality - it will be interesting to see how the administration claims a bill that raises taxes retroactively squares with the state constitution's clear, one-sentence declarative prohibition against the legislature passing "retrospective" (retroactive) laws.

A bigger question is, why is the Bredesen administration so desperate to raise taxes on Tennessee businesses? It doesn't need the $75 million in additional revenue - Bredesen's budget could be balanced without it thanks to revenue that is growing even faster than was estimated in his proposed budget.

And besides being unconstitutional, the bill may well slow the economic recovery in Tennessee. As Nashville small-business owner Rex Hammock said rather succinctly of this legislation, which is scheduled to be voted on Monday by the state Senate:

Tennessee lawmakers are one step closer to taking away from small businesses one of the key benefits of last year's federal tax cuts designed to spur investment in capital equipment.

It's a mystery.

You can find all of my past coverage of this proposed tax increase in my Tennessee Budget & Taxes archive of posts. The first post, Bredesen Pushes Tax Increase on Business, was published on April 8.