UPDATE: The House passed SJR221 today, 73-17. The measure will come up again for a second vote in both the House and Senate in the next legislative session, when it must pass by a two-thirds majority.
The House of Representatives is set this week to move toward amending the state Constitution to clarify that an income tax is banned in Tennessee.
Senate Joint Resolution 221, sponsored by Sen. Brian Kelsey and Rep. Glen Casada, both Republicans, has already passed in the Senate. A vote was postponed in the House last spring on the request of House GOP Leader Gerald McCormick, who was hesitant to dive again into the historically contentious debate when the measure came to the floor in the waning hours of the 2011 session.
The text of the proposed amendment to the Tennessee Constitution reads as follows:
Notwithstanding the authority to tax privileges or any other authority set forth in this Constitution, the Legislature shall not levy, authorize or otherwise permit any state or local tax upon payroll or earned personal income or any state or local tax measured by payroll or earned personal income; however, nothing contained herein shall be construed as prohibiting any tax in effect on January 1, 2011, or adjustment of the rate of such tax.
Should a majority of House lawmakers vote in favor of SJR221 on Thursday, and it is expected to pass by a large margin, then Tennessee’s constitutional-amendment process — one of the most lengthy and politically arduous in America — will require that the measure come back before members of the General Assembly next session and be passed by a two-thirds majority in both Houses. If it succeeds, it would go to the people on the 2014 general election ballot.
The question of whether the state ought to have an income tax was once one of the most polarizing issues in Tennessee politics. In the late 1990s and early 2000s the looming prospect of politicians imposing an income tax on Tennesseans sparked nascent Tea Party protests outside the state Capitol.
That was then, this is now: Proponents of enacting an income tax have largely been vanquished from the Legislature and the mainstream of Tennessee politics.
“There aren’t too many left,” said Casada. “The voters took care of a lot of them over the years.”
Indeed, SJR221 was approved last year in the Senate with only four lawmakers, all urban Democrats, opposing it.
In the House, SJR221 has broad bipartisan support as well.
Democratic Leader Craig Fitzhugh and Democratic Caucus Chairman Mike Turner have both indicated they’ll probably vote for the measure. Both said they support giving Tennessee voters the opportunity to weigh in directly on the issue at the polls.
The Tennessee Constitution currently states, “The Legislature shall have power to levy a tax upon incomes derived from stocks and bonds that are not taxed ad valorem.”
Opponents of an income tax tend to believe that because the Constitution gives no direct authority to the Legislature to tax income in general, then it legally can’t. Supporters of an income tax have argued that because the Constitution doesn’t prohibit the Legislature from taxing all income, then nothing would legally stop it from doing so.
Asked Tuesday whether he believes taxing work income is currently prohibited under the existing wording of the state Constitution, Fitzhugh said he “doesn’t desire to rehash that again.”
The state’s most vocal proponent of enacting a tax on personal income is Tennesseans for Fair Taxation, which also includes other member-organizations like the Tennessee Education Association, the Tennessee Public Employee Association, the League of Women Voters and various other labor union, community activist and progressive advocacy groups.
Members of Tennesseans for Fair Taxation believe it would be fully constitutional — and desirable — for the Legislature to enact an income tax statutorily, and they staunchly oppose the effort to eliminate the General Assembly’s power to do so on its own.
“We feel that the (state constitutional-amendment) process is so in-depth and unlikely that it would essentially tie the hands of future legislators to use that option,” said Elizabeth Wright, executive director for TFT.
Constitutionally prohibiting the state from collecting income taxes in the future “would be devastating for Tennessee,” she added. Wright said members of TFT will likely join with Occupy Nashville protestors to demonstrate against the House passing SJR221, as they did last week when the Legislature convened to kick off the 2012 session.
Speaking on behalf of Tennessee’s League of Women Voters chapter last Legislative session, lobbyist Stewart Clifton told the House Finance Committee that the hands of future legislators “should not be tied at either the state level or the local level, as (SJR221) does.”
“An income tax is obviously nothing that anyone is proposing right now, but we don’t know what the future holds,” Clifton said.
The League of Women Voters has declared that it supports “a broad-based personal income tax and repeal of the Hall income tax in order to enhance the equity and balance of the tax structure and to produce adequate state and local government revenue.”
The League has also concluded that “the statewide income tax should be adopted by Legislative action rather than Constitutional amendment.”
Tennesseans for Fair Taxation has suggested that “there is no language (in the Tennessee Constitution) that specifically prohibits any kind of state tax based on income which is why the last three attorney general’s have all said that, properly worded, an income tax is constitutional.”
Former Attorney General Paul Summers, who served as the state government’s chief legal counsel from 1999 to 2006, twice declared that the Tennessee Legislature could conceivably establish a tax on people’s earnings in Tennessee, first in 1999, then in 2003, when he wrote that “there are various means by which the General Assembly could levy a tax on, or measured by, salaries, payrolls, or income.”
While SJR221 sponsor Casada says he thinks the current wording of the Tennessee Constitution prohibits an income tax — and points out that the Tennessee Supreme Court has endorsed that interpretation in the past — he agrees that SJR221 will tie the hands of future lawmakers.
That is, of course, kind of the point, he said.
“There are some things that are just so onerous that you don’t want to do them,” said Casada. “I think taxing a person’s income is one of those things.”
Casada disagrees, however, with the assessment that the income tax ban is in the truest sense “permanent.”
All that amending the Tennessee Constitution to prohibit an income tax would really do is slam the door on any backdoor maneuvering to sneak an income tax through the Legislature without a vote of the people, said Casada, who guesses that support in the general pubic for the thrust of SJR221 is “north of 60 percent.”
“There is no such thing as a permanent ban on anything in our constitutional democratic republic,” said Casada. “Granted, it takes work and time. But as long as there is a mechanism to change the Tennessee Constitution, there is a mechanism to change anything that is in it.”