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Amendment to ban state income tax advances

12:42 AM, Feb 6, 2013   |    comments
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Senate Finance Committee advanced a proposed constitutional amendment to explicitly ban a state income tax

Tennesseans currently do not pay a state income tax, and now some lawmakers want make sure tax payers never will.

On Tuesday, the Senate Finance Committee advanced a proposed constitutional amendment to explicitly ban a state income tax. The measure would need to received two-thirds vote in both chambers of the General Assembly before it could go before voters in the 2014 election.

"There are very few people who are going to be in favor of an income tax, or any tax, as far as that goes," said Don Leatherman, a University of Tennessee law professor who specializes in federal taxes, but also offered analysis to 10News about what would happen if the state income tax ban passed.

"It means today, the law is the same," he said. "But if, in sometime in the future, there was a need for added revenue it would eliminate the income tax as a potential source of revenue."

Leatherman said that could bind future lawmakers, or force them to find the revenue from another source.

"Presumably, [the state] could impose a tax that's not collected through payroll, although those are more inefficient and they're often easier to avoid. It may mean it would have to increase the sales tax or something like a property tax," he said, listing a few other methods.

He says the issue can be analyzed from an economic standpoint, or a political one. Leatherman finds the proposal a little strange, saying current lawmakers are skeptical of the potential impact of those who replace them.

"The odd thing here  -- is [the proposal] to eliminate an income tax, which is a responsible option to collect tax, because essentially, they can't be trusted."

He also explained how, without a state income tax, the sales tax is very important to the state as a method of revenue. However, many people often forget about it.

"If you ask people how much income tax they paid last year, they'll know. If you ask them how much sales tax they've paid, they wont know because the sales tax is paid on a transaction by transaction basis. Most people don't keep track of it for the whole year."

According to the Associated Press, opponents of the state income tax ban argue the measure is unnecessary amid solid opposition to an income tax among Republican lawmakers who already hold super majorities in both the House and Senate.

The lone vote against the measure came from Democratic Sen. Douglas Henry of Nashville, an income tax opponent who said the measure would tie lawmakers' hands in tough economic times.

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