Tag Archives: income

Amendment 3 airship ‘in-kind’ spending questioned, defended

A Missouri-based firm has paid almost $200,000 to bring a 200-foot-long airship and Arthur Laffler into the campaign for passage of Amendment 3 and critics of the proposed permanent ban on a state income tax are questioning the tactic, reports the Commercial Appeal.

The $192,771 tab was paid by the St. Louis-based political consulting and lobbying firm Pelopidas LLC, according to the Yes on 3 group’s financial disclosure report, which listed the spending as an “in-kind contribution.”

…“It’s hard to take seriously concerns about fiscal responsibility when they come from a group that spends $190,000 to send a 200-foot-long bag of gas around the state,” said Bill Howell, treasurer of Citizens for Fiscal Sanity, the group fighting Amendment 3.

Howell called it “a shame that our campaign finance laws don’t require an out-of-state lobbying firm to register as a single-measure committee when it is clearly a very active player in the campaign. Because of that, no one can know who really is behind the campaign for this constitutional amendment.”

But Travis Brown, co-founder of Pelopidas, said the event was part of a larger national effort called Create a Great State intended “to simply urge many states to lower their price on work.”

That “price” is a state income tax, said Brown, who has co-authored books with Laffer on the impacts of state income taxes on state economies.

…State Sen. Brian Kelsey, R-Germantown, said the Yes on 3 campaign committee that he chairs will not reimburse the St. Louis group, which he said contacted him to offer help after reading about Amendment 3.

“They have a history of opposing income taxes in Missouri and often cite Tennessee as an example of a state in which not having an income tax has increased jobs and economic development,” Kelsey said Friday.

Kelsey said that the $192,711 Pelopidas spent in Tennessee on a crowd that by Kelsey’s own estimation totaled about 200 people wasn’t fiscally irresponsible because “there were no government funds spent on it whatsoever. It was very fiscally responsible: it was zero,” he said.

“We had a great kickoff event to raise awareness in the state. They’ve had similar events in multiple states, and they had to fly the airship from North Carolina to Missouri, so Nashville was a natural place to stop and hold a kickoff rally. The timing worked out well for both Yes on 3 and the Create a Great State campaign. That’s a campaign they are running in a number of states.”

Kelsey said he assumes someone is paying Pelopidas LLC but he doesn’t know who, and no Tennessee disclosure is required beyond the listing as an in-kind contribution.
…Kelsey said that the Yes on 3 campaign… has no plans to run TV ads but is running limited radio ads across the state.

The radio ad opens with car horns blowing, reminding voters of the horn-honking protests around the State Capitol from 1999 to 2002 when lawmakers considered a state income tax. The narrator says, “Remember how close we were to being burdened with a state income tax just a few years ago? Well now you have the chance to forever ban an income tax by voting Yes on Amendment 3.”

Kelsey follows, saying, “Not having an income tax has already brought many jobs to Tennessee. Voting Yes on Amendment 3 will bring even more jobs.”

AP’s story on Amendment 3

By Lucas Johnson, Associated Press
NASHVILLE, Tenn. — Tennesseans are getting ready to vote on a proposed constitutional amendment that would bar lawmakers from ever imposing a state income tax.

Early voting for the Nov. 4 election starts Wednesday, but no matter what voters decide, it’s unlikely that Tennessee lawmakers would seriously consider an income tax because it’s become such a toxic political issue.

“I’m not certain there’s a huge impact because I don’t think there’s going to be an income tax in Tennessee regardless of whether the amendment passes or not,” Republican Gov. Bill Haslam recently told reporters. He said he would vote for the amendment.

The last serious attempt to impose a state income tax failed in 2002 amid raucous Capitol protests that included a brick being thrown through the window of the governor’s office and demonstrators banging on the doors of the Senate chamber while lawmakers sought to conduct their business within.

The Legislature instead passed a 1 percentage point increase to the state’s sales tax rate to generate $933 million in new revenue, which was the last time the state passed a general tax increase.
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Anti-tax advocates get early start hammering Hall

Maneuvering has already begun for a renewed effort toward repeal during the 2015 legislative session of Tennessee’s Hall income tax, which this year produced an unexpected $4.3 million surplus in revenue for the city of Knoxville, reports the News Sentinel.

Here’s Charlie Daniel’s take and, below that, an excerpt:

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A bill to repeal the Hall tax — a 6 percent levy on dividend and interest income with resulting revenue split between state and local governments — failed in the 2014 session despite backing from national organizations that included Americans for Prosperity and Americans for Tax reform, depicted as part of the “Koch brothers advocacy machine” in a March Politico article on the effort.

This month, the Beacon Center of Tennessee presented what it describes as “a brand new reform package to make Tennessee income tax-free once and for all.”

Basically, the revised proposal would cut the tax by 1 percent per year, completing repeal over a six-year period, and require that the state absorb all the revenue loss. Local governments would be “held harmless” with state government sending payments from other revenue sources to local governments.

…Actually, the new Beacon Center proposal is similar to the final version of twice-amended legislation that failed last session in the Senate Finance Committee (SB1427) after Finance Commissioner Larry Martin, representing Gov. Bill Haslam’s administration, and state Comptroller Justin Wilson both said that, while they like the idea, it was not fiscally responsible given the state’s tight budget picture.

…The tax generated $264 million last year, the state receiving five-eighths of that amount under the current statute. The remaining three-eighths goes to local governments, with distribution among them based on the residence of those paying the tax. Some towns with a high population of people receiving substantial income from dividends and interest — the Nashville suburb of Belle Meade being a leading example — thus rely heavily on Hall income for government functions, while those in rural areas with few investors get very little.

Knoxville is somewhat in between, but has been doing better than expected in the last couple of years. The city had anticipated $4.9 million in Hall revenue in the 2013-14 fiscal year, but actually received $9.2 million. City Council members recently approved Mayor Madeline Rogero’s plans for spending the surplus on a variety of projects.

Nashville ‘Yes on 3’ rally with blimp draws more than 100

A 200-foot blimp was part of a Nashville rally in support of Amendment 3 Tuesday at Nashville, reports the Tennessean. The blimp, emblazoned with the “Create a Great State” slogan of the Yes on 3 campaign will now be traveling to other parts of the state.

From the Tennessean’s report:
More than 100 people came to the Whites Creek music venue to voice their opposition to an income tax, something state officials have long embraced.

Making the ban permanent would provide an additional economic spark to the state, Sen. Brian Kelsey, R-Germantown, who sponsored legislation that brought the question to the ballot.

“Not having an income tax has brought jobs into the state,” Kelsey said. “We think banning it will bring even more jobs in.”

Brown said banning the tax would “entrench the values” of the state and could provide additional economic opportunity.

Supporters at the rally were vocal about the necessity of the amendment, even in a state where income tax proposals have little chance of success, said Robert Kilmarx, a former Tennessee Tea Party official. He was a protester when Republican Gov. Don Sundquist made an ill-fated bid for an income tax in 2002.

“It’s an insurance policy,” he said.

Study says rising income inequality a problem for states (like TN) reliant on sales tax revenue

By Erik Schelzig, Associated Press
NASHVILLE, Tenn. — Tennesseans are just weeks away from voting on a constitutional amendment to bar lawmakers from ever imposing a state income tax. The November vote approaches as a new study from ratings agency Standard & Poor’s suggests that rising income inequality has a stronger negative effect on the states most reliant on sales tax revenues compared with those with those more dependent on income taxes.

The S&P report that the affluent tend to save a greater share of their income and spend it on untaxed services, meaning that states are unlikely to see much of an increase in sales tax collections based on the gains among this group.

Regardless of the outcome of constitutional amendment, it’s unlikely that Tennessee lawmakers would seriously consider a state income tax —which has become a toxic political issue since the last serious attempt to impose one failed in 2002 amid raucous Capitol protests that included a brick being thrown through the window of the governor’s office and demonstrators banging on the doors of the Senate chamber while lawmakers sought to conduct their business within.

The Legislature instead passed a 1 percentage point increase to the state’s sales tax rate to generate $933 million in new revenue, which was the last time the state passed a general tax increase.

The public backlash against the income tax proposal championed by then-Gov. Don Sundquist, a Republican, joined by Democratic leadership in the Legislature, led several supporters to retire from office or to their defeat in re-election campaigns.

Republicans, who now hold supermajorities in both chambers of the Legislature, have since voted to phase out the state’s inheritance and gift taxes, and are also taking aim at reducing or eliminating the Hall tax on interest from bonds and notes and dividends from stocks.

The Standard & Poor’s analysis shows that Tennessee’s tax revenue grew an average of 9 percent between 1950 and 1979. It then dropped to 8.2 percent in the 1980s, 5.9 percent in the 1990s and down to 3.8 percent in the 2000s. Since 2009, the average annual growth rate has rebounded slightly to 4.3 percent.

Meanwhile, the study suggests that the gains flowing to the top 1 percent come at a broader cost to society. Not only does rising inequality appear to stunt overall economic growth, but S&P links it to a slowdown in average yearly gains in state tax revenues.

Most economic activity comes from consumer spending, a key driver of growth. But consumers have become increasingly reluctant to spend as median incomes have barely increased over three decades and remain lower than they were in 2007 when the Great Recession began. Median household incomes, adjusted for inflation, were $54,045 in July, about 4.6 percent lower than they were in July 2007.

By contrast, the top 1 percent of earners has prospered for more than 30 years. Adjusted for inflation, their average incomes have nearly tripled to $1.26 million since 1979, according to the IRS. But S&P notes that wealthier individuals tend to spend less of their money, meaning that states are unlikely to see much of an increase in sales tax collections.
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‘Yes on 3’ promotion features airbus, country singer and Arthur Lafer

News release from ‘Yes on 3’ Committee:
NASHVILLE, Tenn. (Sept. 12, 2014) – The world’s largest airship will kick of a multi-city tour in Nashville on Wednesday, Sept. 17, as part of the “Create a Great State” challenge and free concert series designed to promote state tax reform and fiscal responsibility.

The Nashville stop, which will be at the Woods at Fontanel beginning at 7 p.m., includes an up-close view of the 200-foot-long airship, which would reach both 30-yard lines if placed in the center of LP Field, and a free concert by country music superstar David Nail.

Nail most recently was nominated for several Academy of Country Music awards after opening for Lady Antebellum and Darius Rucker and deciding to go solo.
The “Create a Great State” challenge is intended to increase awareness among voters about preserving state freedom away from taxing your personal income.
Amendment 3, one of several on the November 4th ballot, would constitutionally prohibit a state income tax in Tennessee.

“What happens in Tennessee on the amendment vote is extremely relevant for people like me who chose to live and start a business in the Volunteer State,” explained Dr. Arthur B. Lafer, a renowned economist and consultant who studies the relationship between taxes and economic growth.

“Tennesseans can vote to ensure that our state remains economically competitive by making its lack of income tax a permanent part of the Constitution. Tennessee and the other states with no income tax averaged job growth of 9.9% over the past decade, four percentage points higher than the nationwide average of 5.9%. Voting Yes on 3 will help us maintain our business-friendly reputation,” Dr. Lafer said.

Concert guests will have the opportunity to get closer to the airship, which will be located behind the concert stage for David Nail.

The event is free and open to those who wish to support the passage of Amendment 3. To attend, text “YESON3” to 41411, and give your name, which will be checked upon entrance to the event.

Hosts of the Create a Great State Nashville event include Lafer along with State Senator Brian Kelsey and State Senator Mark Green. This committee also includes businessman Lee Beaman, along with national best-selling authors Brad Thor and Travis H. Brown.

For more information on Amendment 3, visit http://www.beacontn.org/2014/06/yes-on-amendment-3/.

TN Man Charged With Fraud in Romney Income Tax Scheme

NASHVILLE, Tenn. (AP) — A Tennessee man was charged Wednesday in a scheme involving former Republican presidential nominee Mitt Romney’s income tax returns during the 2012 campaign.
The U.S. Justice Department said a federal grand jury in Nashville indicted Michael Mancil Brown, 34, of Franklin, and charged him with six counts of wire fraud and six counts of extortion.
Brown is accused of having an anonymous letter delivered to the PricewaterhouseCoopers LLP accounting firm in Franklin last August, demanding that $1 million in digital currency be deposited to a Bitcoin account to keep some of Romney’s income tax returns from being released. The Justice Department said Brown falsely claimed that he had gained access to the PricewaterhouseCoopers internal computer network and stolen tax documents for Romney and his wife, Ann Romney, for tax years before 2010.

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House Gives Final OK to Anti-Income Tax Constitutional Amendment

The House gave final approval Monday to a proposed amendment to the Tennessee constitution that would prohibit a state income tax if approved by voters in a statewide referendum next year.
The House vote was 88-8 after brief debate with two Democrats, Reps. Mike Stewart of Nashville and Larry Miller of Memphis, speaking against the amendment and House Republican Caucus Chairman Glen Casada defending it. The measure (SJR1) was approved 27-4 by the Senate on Feb. 14.
Stewart recalled that former Republican Gov. Don Sunquist had championed a state income tax in 2002 because he “felt that our business and sales tax had essentially reached a peak.” While unpopular now, he said the idea remains “within the solar system of policies” that could be considered in the future as well.
“I think by eliminating this level of flexibility we going down the wrong road… (toward) inflexibility in our tax system,” said Stewart.
Miller said the state constitution is “a sacred document” that “you don’t play politics with.” If voters approve the ban on an income tax, he said, ” It could take another 50 years before we realize the mistake we made.”
“The income tax – that’s the mistake,” replied Casada, contending that a state income tax is a “terrible policy” that deserves special treatment via a constitutional prohibition.
Voters will now have at least three constitutional amendments to consider on the November, 2014, ballot. Legislators have previously approved a proposed amendment setting up a new system for appointing the state’s top judges and another pushed by anti-abortion activists.

Income Tax Ban Clears Senate

NASHVILLE, Tenn. (AP) — The Senate voted Thursday to place proposed constitutional amendments to ban a state income tax before Tennessee voters.
The chamber approved the measure on a 26-4 vote, and if the House concurs, it would be placed on the ballot in next year’s general election.
The political fallout from failed efforts to impose a state income tax more than a decade ago has already made renewed efforts exceedingly unlikely. But Republican Sen. Brian Kelsey of Germantown said his proposal is aimed at eliminating any uncertainty about the measure in the future.
Sen. Douglas Henry of Nashville, one of the four Democrats to vote against the measure, likened himself to “the skunk at the garden party” for raising concerns that the proposal would also eliminate the possibility of payroll taxes on employers.
“If you’re going to rule out an income tax, you should not rule out the payroll tax, because we may very well need it some time,” Henry said.
He stressed that he has long opposed the income tax, including during his time as chairman of the Senate Finance Committee, when three governors unsuccessfully sought his support for changing Tennessee’s sales tax-based system.
But the state’s fiscal situation could become difficult with the payroll tax option off the table, he said.
The final serious attempt to enact a state income tax occurred in 2002, when former Republican Gov. Don Sundquist and Democratic leadership in the Legislature sought to overhaul the state’s tax system.
The proposals led to talk radio-fueled protests at the Capitol and included a brick being thrown through the window of the governor’s office. The measure ultimately failed, and several supporters ultimately decided against running again or were defeated as part of a public backlash.
Democrats have since lost control of both chambers of the General Assembly.
Kelsey is also the sponsor of a constitutional amendment to give the lawmakers the power to confirm or deny the governor’s appointments to the state Supreme Court. A scheduled vote was put off for a week on the request of Sen. Ophelia Ford, D-Memphis.