Anti-Income Tax Amendment Half Way to Being on Ballot

Seven months after Republicans first brought it up for a vote– the state House finally approved a proposal to put anti-income tax language in the Tennessee constitution. Republicans wanted to pass the resolution at their last meeting in May – but not enough lawmakers stuck around after passing a budget.

Representative Glen Casada, a Republican from Williamson County, easily got approval for the anti-income tax amendment when it came up for a vote on Thursday. Now it’s half-way to the ballot – it has to be passed again, by the next General Assembly.

Casada says using the state constitution to bar a state income tax would keep any future legislature from hurriedly enacting an unpopular tax.

“Future General Assemblies, if they would want to do that, they’ll have to change the constitution first.”

House Democratic Leader Mike Turner says the proposed amendment is simply playing politics. He says the constitution already bans any tax on income.

“This is clearly a ploy to get the income tax on the ballot….and obviously get a higher Republican turnout in 2014.”

The proposed referendum must still be passed, by a two-thirds majority next time, by the the lawmakers to be elected this fall. Then it’ll be on the 2014 ballot, right next to the governor’s race.

Ten years ago, a state income tax proposed by then-governor Don Sundquist was fought to a standstill after talk radio announcers and conservative legislators mobilized horn-honking drivers to circle the legislative offices in opposition to the tax.

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Casada was asked if there is a particular demographic that opposes the idea of a state income tax.

“I think those that earn an income are most strongly opposed to this, because it’s a tax on them. Which generally is your middle class folks. And those are the kind of people, they go to work, they raise their family. They rarely get involved in government, but they’re taught the basic things of thrift, and conserve, and save.”

The separate issue of the “Hall Income Tax,” a tax on income from dividends and interest, isn’t affected by the proposed constitutional amendment. But Casada says that tax – also widely unpopular – will be worked on with day-to-day legislation

“The Hall Income Tax is tax on unearned income, interest if you will, and the governor has committed to tackling that, incrementally, and I support the governor on attacking and eventually deleting the Hall’s Income Tax as well.”

Or maybe the situation is that the governor is supporting Casada.

Senate Speaker Ron Ramsey says he has talked the governor about the Hall Income tax, but that issue is not specifically a gubernatorial initiative.

“I think we need to keep raising the exemption on the Hall Income Tax every year, take a bite at that apple. And he [the governor] does not care at all, it’s just not his initiative to do that, but I think you’ll see that as a legislative initiative, to also raise the cap on the Hall Income Tax.”

The Hall Income Tax was passed at the end of the Depression, aimed at interest earned by big-money investors. But in recent years it has had a heavy impact on citizens trying to sell homes that don’t qualify for government-guaranteed mortgages.

Those sellers end up “toting the note” for the new buyers, and much of that income is treated as interest. Raising the exemption is aimed at relieving the tax burden on individuals and families who own one house as “investment income.”