Its
Déjà Vu All Over Again...and Again...and Again...
This Time, Anti-Tax Proponents Call Out the DOGS
For the umpteenth
time in the past four years (Read: Citizens
Defeat Tennessee Income Tax Measure (Again)), Tennesseans
rallied at the state capitol in Nashville last week to oppose a
state income tax. And, for the umpteenth time, chants of "NO
NEW TAXES" from thousands of angry taxpayers, and incessant
horn-honking from citizens circling the capitol in their automobiles,
won the day.
On May 29, House
Speaker Jimmy Naifeh (D-Covington) and Republican Governor Don Sundquist
fell five votes shy of the 50 needed to pass Naifehs 4.5 percent
flat-rate income tax measure. Shortly after the vote, lawmakers
adjourned for three weeks, leaving the House and Senate Finance
Committees behind to craft a balanced budget with no new tax revenue.
Under the state constitution, the Tennessee legislature is required
to pass a balanced budget annually. June 30 marks the end of the
fiscal year.
Tennessee is
facing a nearly $500 million budget deficit, due in large part to
out-of-control government spending and gross mismanagement of TennCare,
the states health care program. (Remember Hillarys national
healthcare plan? This is the pilot program in action.) Moreover,
the state is $950 million shy of Governor Sundquists proposed
2002-2003 budget, and Finance Committee members are busy hacking
away.
The House Finance
Committee began hearings this week on specific cuts within a no-new-taxes
budget, formerly known as the Downsizing Ongoing Government Services
(DOGS) budget. First on the chopping block is TennCare, as some
are advocating its elimination. Additional recommendations include
abolishing the states Tourism and Economic Development Departments,
closing all state parks that are not self-supporting and an across-the-board
12.5 percent reduction in most other state government departments.
While Finance
Committee members are busy slashing the size of government, Sundquist
and Naifeh are mining for additional votes in the legislature, as
they vow to bring the income tax measure up again when lawmakers
return to Nashville on June 19.
Hypothetically,
should income tax advocates obtain the necessary votes for passage,
which is unlikely given the overwhelming opposition from the citizenry,
a state income tax faces an even bigger and more important hurdle
than the philosophical impasse on how to balance the budget. A state
income tax violates the Tennessee Constitution.
Article II,
Section 28 of the Tennessee Constitution states, "The Legislature
shall have the power to levy a tax upon income derived from stocks
and bonds that are not taxed ad valorem." The Tennessee Supreme
Court on three separate occasions has unanimously declared unconstitutional
a tax on personal income passed by the state legislature based on
that clause.
In 1932, the
court ruled in Evans v. McCabe, 52 S.W.2d 159, that Article
II, Section 28 "conferred upon the Legislature the power to
tax only one class of incomes," and "necessarily denied
to the Legislature the power to tax incomes of other classes."
In 1960, in Jack Cole Co. v. MacFarland, 337 S.W.2d 453,
and again in 1964 in Gallagher v. Butler, 378 S.W.2d 161,
the Tennessee Supreme Court upheld that earlier decision.
Thats
not stopping Sundquist and Naifeh from continuing their quest to
impose a state income tax. They point to recent state attorney general
opinions claiming that a tax on income beyond that derived from
stocks and bonds would be constitutional. Ironically, so did the
legislatures that passed income taxes that were ultimately struck
down in 1932, 1960 and 1964.
We can almost
predict whats going to happen when the legislature returns
in a couple of weeks. Why? Because we have seen it before, time
and time again. Pro-tax advocates will bring Naifehs measure
up for a vote. People from across the state will show up in droves
to protest the measure. And, it will ultimately be defeated, again.
The legislature will unleash the "DOGS" and pass a balanced
budget with no new tax revenue, again. And income tax advocates
will not go away, as they go back into their little holes to draft
a strategy for next year, again.
If, on the off
chance they do succeed, there is every reason to believe that the
Tennessee Supreme Court will strike it down, again.
Déjà
Vu?
As defenders
of federal and state constitutions, we believe it should never have
to get that far. Perhaps it wont. After all it is an election
year, and Tennesseans are paying attention."
[Posted
June 6, 2002]
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