Banning Income Taxes in Tennessee

March 15, 2011

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While states such as Illinois are gaining national attention for fiscal woes and raising taxes, Tennessee is getting coverage for another reason: creating a resolution to constitutionally ban income taxes.

Tennessee effectively has no income tax, only imposing income taxes on interest from bonds and dividends from stocks. Though taxing wage income has become more or less standard elsewhere, Republican legislators in Tennessee are pushing to amend Tennessee’s constitution to ensure that a wage income tax does not make its way to the state any time soon.

Senator Brian Kelsey (R), the bill’s sponsor, and other supporters hope that the bill will help make Tennessee a more attractive state to do business and bring more businesses to Tennessee due to the added assurance of continuing the “no income tax” policy approach.

Democratic Sen. Beverly Marrero of Memphis said the proposal, “would be bad for businesses and bad for the state,” and could tie the hands of future state lawmakers who may want to take a different approach in dealing with the state’s budget situation.

Last year, Kelsey had previously introduced a similar resolution. After passing the Senate with a 25-7 vote, it later stalled in the democratic controlled House. Kelsey has reintroduced the resolution which has already passed the Senate 28-5. The measure is expected to pass the House, and could be on the ballot in 2014.


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