NASHVILLE, Tenn. (AP) — Legislation that would declare an income tax and payroll tax unconstitutional in Tennessee has passed the Senate.

The proposed constitutional amendment sponsored by Republican Sen. Brian Kelsey of Germantown was approved 25-7 Monday evening. The earliest it could go before voters is 2014.

Even though the state constitution already says an income tax is not allowed in Tennessee, Kelsey has said the proposal is necessary because the difficult economic times may prompt lawmakers to try to pass an income tax.
However, opponents say the measure is not necessary and that the motive for it is strictly political.

By Tom Humphrey

The Senate approved 25-7 Monday night a proposed amendment to Tennessee’s constitution that would prohibit a state income tax.

The measure ( SJR763, with an adopted amendment) now goes to the House. If approved there during the current legislative session, it will need approval again by the 107th General Assembly, which meets in 2011 and 2012, and then, finally, approval by voters in a statewide referendum in 2014.

The resolution was sponsored by Sen. Brian Kelsey, R-Germantown, who said he believes an income tax is already unconstitutional in Tennessee, but a constitutional amendment is needed to “clarify” that is the case because some dispute the proposition.

“If you want less of something tax it. If you want more of something, don’t tax it,” said Kelsey in his floor speech, adding that he was paraphrasing President Reagan. “We all want more income in Tennessee, so let’s make sure we never tax it.”

Sen. Douglas Henry, D-Nashville, and Jim Kyle, D-Memphis, spoke against the resolution. Henry said he was concerned that it also prohibits cities and counties from levying a payroll tax, which is in effect a tax on businesses rather than individuals.
Henry, who said he has always opposed an income tax, also contended it is not appropriate to prohibit anything far into the future.
Two senators spoke against the measure –

“I can’t read the in the tea leaves what’s going to happen 20 or 30 or 40 years from now. I don’t know what kind of box we’re going to be in,” Henry said. “I don’t believe I can look far enough into the future to say this unpleasant necessity might be forced upon us to continue to operate the state.”

Kyle said he believes the entire resolution is “defective” because it requires formal notice of the resolution be given to the public by posting it on the Internet. The state constitution says proposed amendments must be “published” and many believe that does not cover the Internet, which did not exist when the 1870 constitution was adopted.

Kyle noted that about half of Tennessee households do not have Internet access and predicted the courts will reject the whole resolution, meaning it will never come to a statewide vote even if it clears the legislative process.

The no votes came from Sens. Ophelia Ford, D-Memphis; Thelma Harper, D-Nashville; Joe Haynes, D-Nashville; Henry; Kyle; Beverly Marrero, D-Memphis; and Reginal Tate, D-Memphis.

THE CITY PAPER
Nashville Online Newspaper
By Jeff Woods

The Tennessee Senate took the first step Monday to amend the state constitution to ban the income tax, beginning a two-year political process to place the volatile issue on the ballot for voters to decide.

The Senate vote was 25-7, and there were only a few minutes of debate. If the House also passes the resolution this year, and the next General Assembly approves it by a two-thirds majority, the referendum would go before voters in 2014.

“If you want less of something, tax it. If you want more of something, don’t tax it,” said the resolution’s sponsor, Rep. Brian Kelsey, R-Germantown. “We all want more income in Tennessee, so let’s make sure that we never tax it.”

Arguably, the state constitution already bans the income tax. The state Supreme Court has ruled that way three times, but opinions from the state attorney general have raised questions about those decisions.

In 2002, the legislature refused to passed a state income tax advocated by Republican Gov. Don Sundquist. The proposal drew rowdy protests, and Sundquist was vilified by his own party. If the income tax had become law then, everyone expected its constitutionality to be tested in court.

Kelsey wants to end any uncertainty by amending the constitution. His resolution allows the existing state tax on interest income from stocks and bonds, but he said he’d like to ban that later as well.

“Opposition to an income tax is very strong right now,” Kelsey said, “so now is the time to clarify this issue once and for all and to put it before voters so they can speak.”

Sen. Douglas Henry, D-Nashville, joined six other Democrats in voting against the resolution. He’s a longtime foe of the income tax, but he said he opposes Kelsey’s resolution because it would put future lawmakers in a box.

“It’s a wretched system of taxation in my opinion,” Henry told the Senate. “I intend to continue voting against it. But Mr. Speaker, I’m not going to be here forever. I can’t read the tea leaves to know what’s going to happen 20 or 30 or 40 years from now. I don’t know what kind of box we’re going to be. … I don’t believe this takes the long view with respect to the necessities that come up after we are gone. I don’t believe I can look far enough into the future to say the day may never come when this unpleasant necessity may be foisted off upon us.”