Monday, February 06, 2012
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State Senate to Debate Income Tax ban

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 Nearly a decade after a fight over a state income tax brought angry crowds to the Capitol, Tennessee lawmakers are poised to open a debate over banning the tax once and for all.

The state Senate is taking up a proposal that would explicitly place a ban on the tax into Tennessee's constitution. The vote, which could take place as soon as Thursday, would set up an election-year litmus test for legislators and move voters a step closer to a statewide referendum on the ban in 2014.

Tax reform advocates say the constitutional amendment would make it harder for state officials to manage future budget crises. The income tax's foes, however, say a constitutional amendment is needed to drive a stake through the heart of the issue before it resurrects.

"I want to tie government's hands on this issue," said state Sen. Brian Kelsey, R-Germantown, and the measure's sponsor. "I don't want there to be an income tax ever."

Seven states have no income tax whatsoever. Tennessee and New Hampshire are the only two that tax investment income but not salaries and wages.

The amendment would add language specifically banning a tax on personal income but would let the state continue to collect the tax on investment income.

Tennessee's arduous process for changing the constitution means the earliest a proposed amendment could come before voters would be 2014. That means the tax would remain an active political issue for at least three more election cycles.

The proposed amendment will mark the first serious debate over the income tax that the legislature has held since 2002, when then-Gov. Don Sundquist proposed a flat tax that would raise $1.2 billion and cut Tennessee's sales tax.

The plan triggered a spirited public debate that has been credited with establishing Republican majorities in both chambers of the state legislature and may have laid the foundation for the anti-tax tea party movement in Tennessee.

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