December 12, 2004

Recommendation Spurs Calls to Ban State Income Tax

The recommendation from the Tennessee Tax Structure Study Commission for creation of a state income tax is spurring legislative action - to ban the income tax.

A study commission's recommendation for a state income tax has caused some lawmakers to step up efforts for a constitutional ban on the levy. Sen. Joe Haynes, D-Nashville, who backed legislation in 2002 to create the Tennessee Tax Study Commission and said then he planned to sponsor the panel's recommendations as legislation, now says he's "inclined to support" a state constitutional amendment banning an income tax.

"I've thought about doing that myself, and I've talked to some Democrats about it," he said. "You may see that come from the Democratic Caucus, as a matter of fact."

The House Republican Caucus already has proposed such a constitutional amendment. And Rep. Glen Casada, R-College Grove, said he has drafted the necessary resolution and is prepared to introduce it in the 2005 legislative session, which begins Jan. 11. "I think it's a perfect time to launch the effort because the tax committee has come out with its recommendations," Casada said.

Casada and Haynes said the suggestions provide a new impetus for a constitutional amendment. Casada said the proposal shows the push for a state income tax is not dead, as some legislators have contended, and helps prove a constitutional amendment is needed. "I expect to get votes and support across party lines,'' Casada said. ''It forces legislators to say, 'Yes, I'm for an income tax,' or, 'No, I'm against an income tax.' "

Interestingly, the story I linked to from The Tennessean fails to tell readers of the three Supreme Court rulings or explain to readers why the constitution needs an amendment to ban something three courts have already unanimously said it already bans.

One weakness of the current ban is that it is a ban-by-omission. One section of the stae constitution lists things the legislature may tax and the income tax is not listed. Tennessee's current attorney general, Paul Summers, believes that can be gotten around by redefining "income" as something other than income.

(He has never addressed an issue I raised while appearing with him on a Nashville radio show - that another section of the state constitution clearly lists the income tax as one of the many taxes the legislature may not authorize local governments to impose because the legislature itself is not authorized to impose them. More on that here.)

So, even though it isn't really needed, the amendment is needed in order to once and for all end the debate and stop the income-taxers from trying to get around the constitution and decades of settled law. Casada's amendment would put into the state constitution precise language affirmatively banning an income tax.