Ban an Income Tax in Tennessee: Not so Fast!

Jeff Woods from the Nashville City Paper summarizes an exciting turn of events regarding the proposed ban on a state income tax in Tennessee:

In a comical bit of political theater Wednesday, state House Democrats may have found a way to foil Republican efforts to amend the Tennessee constitution to ban the state income tax.

With the help of a couple of Republicans, who doubtlessly will hear from party leaders about this, Democrats on the House Finance Subcommittee managed to change the anti-income tax resolution to prohibit any increases in the sales tax as well. That, of course, would hamstring state government’s taxing capacity and leave lawmakers without much way to plug budget holes if necessary in the future.

With a straight face, Rep. Jimmy Naifeh, D-Covington, offered the amendment. As House speaker in 2002, Naifeh tried and failed to enact an income tax as part of reform legislation that would have lowered the sales tax. The resulting furor led to the defeat of some Democrats in the next elections.

“This is a friendly amendment,” Naifeh deadpanned as he made his motion, pointing out that Tennessee’s maximum sales tax rate is the nation’s highest at 9.75 percent.

“We’re hurting those people who can afford it the least. A bigger percentage of their income goes for the sales tax than someone who makes $100,000 or $200,000 or whatever.”

“I think it’s just common sense,” he said as some Republicans tried to table his amendment. “I guess if you vote to table this, then you’re voting that we should have more sales tax at some point in time. I hope that we’re not thinking that when we need funds again that we’re going to go and raise the sales tax. It’s against all humanity to do that.”

Reps. Dennis Roach of Rutledge and Steve McDaniel of Lexington were the Republicans who voted with the Democrats.

Rep. Glen Casada, R-College Grove, then tried to postpone action on his resolution, but the subcommittee went ahead and adopted it with Naifeh’s amendment.

The Senate already has voted for the anti-income tax resolution. It needed also to pass the House by a majority in this General Assembly and then by a two-thirds majority in both the House and Senate in the next. Then the resolution would have gone on the ballot for voter approval in the 2014 elections.

In 2002, a state income tax won 45 votes in the House. The state Supreme Court has ruled three times — most recently in 1964 — that the constitution already prohibits an income tax. But in 1999, the state attorney general issued an opinion saying the tax was permissible. Supporters of a constitutional amendment say it’s needed to resolve the issue.