(NASHVILLE, TN), June 2, 2010 — State Senator Brian Kelsey (R-Germantown) said today he was very disappointed by the inaction in the House Budget Subcommittee to approve his constitutional amendment that would have clarified the state’s prohibition of a state income tax or payroll tax in Tennessee. Kelsey, who easily won approval of the measure in the Senate by a vote of 25 to 7 earlier this year, made the statement after the House Budget Subcommittee took the amendment off notice without objection from any of the members. The amendment was #65 on the final committee calendar. Representative Tony Shipley (R-Kingsport) failed to present the amendment to the subcomittee before the committee took the bill off notice and adjourned for the year.
“Tennesseans must still live under the threat of the state income tax due to the inaction of the House to move this amendment forward,” said Senator Kelsey. “The income tax debate is not over. Legislators continue to introduce bills that would impose an income tax every year. This constitutional amendment would have allowed the people of Tennessee to vote to put this issue to rest permanently. Instead, it is a good bet that another income tax bill will be introduced next year just like the one introduced this year.” The “Tennessee Income Tax Law of 2010,” HB 3597, was introduced earlier this year by eight legislators to avoid spending cuts.
The resolution would have specified that the legislature as well as Tennessee counties and cities are prohibited from passing either an income tax or a payroll tax, which is a tax on employers that is measured by the wages they pay their workers. A payroll tax has been proposed in recent years by elected officials in Shelby County and elsewhere as a way around an income tax. A state income tax proposal has repeatedly come before state lawmakers over the last several decades, including failure by only five votes in the House of Representatives in 2002.
There have been three cases before the Tennessee Supreme Court throughout the state’s history that have upheld that the income tax is unconstitutional. The most recent case was decided in 1964, and this case has never been overturned. However, an attorney general opinion in 1999 opined that the tax is legal. The opinion has prompted elected officials in Tennessee to continue to propose both an income tax and a payroll tax in recent years.
“As the stimulus funds dry up, you will see more tax increase proposals pushed, including an income tax,” Kelsey added. “I am very disappointed that this amendment was defeated by the House, given its overwhelming, bipartisan support in the Senate.”
Kelsey’s amendment would have published the constitutional amendment on the Secretary of State website. Kelsey received a commitment from private citizens to pay for publishing the amendment in newspapers, as well. Rep. Shipley circulated a letter confirming this commitment to members of the House Budget Subcommittee prior to today’s meeting, but the House Subcommittee failed to acknowledge the letter in its meeting.