Posted on 05/23/2002 9:34:41 PM PDT by GailA
House defeats 4.5 percent flat-rate income tax
by Tom Sharp and Karin Miller Associated Press
NASHVILLE -- The state House defeated a 4.5 percent flat rate income tax on Wednesday and sent it back to committee after House Speaker Jimmy Naifeh kept the vote open for nearly two hours but failed to collect the necessary votes.
The vote was 49-45 against the tax, with four members not voting. The bill, which needed 50 votes to pass, was referred back to the calendar committee. That means it could resurface in its original form or with changes for a later vote.
"I have no idea when I'll bring it up now. I intend to continue to refine it to satisfy some of the members' concerns," Naifeh said.
Naifeh thought he had the votes needed to pass his plan, but the tally remained at 53-45 against it as he and tax proponents met with lawmakers in an attempt to get a few to change their votes.
When that effort failed, four members with "no" votes agreed to change to "present but not voting." That prevented the bill from getting a majority of "no" votes, which could have prevented consideration of a tax increase -- or possibly of tax cuts -- for the rest of the legislative session.
"You could not have had a tax bill, period. If you wanted to just raise the cigarette taxes, you could not have done that. It would have prohibited consideration of any tax measure, including alternatives to the income tax," said Rep. Matt Kisber, chairman of the House Finance Committee, said of the ramifications of a majority rejection vote.
House members milled about the chamber while Naifeh and his lieutenants talked with members whom they were counting on for support of the tax but who voted against it.
Naifeh took Reps. Frank Buck, John Tidwell and Mike Turner into his private office at the Capitol. The three men said they never promised to vote for the tax but were considering it.
Buck and Tidwell, who changed their votes to "present not voting," said they did so because they couldn't leave the state without the option to consider a tax bill this session. However, they were unwilling to vote for an income tax unless there were changes to government operations, particularly TennCare, the state's health care plan for the poor and uninsured.
They said there was no dealmaking in Naifeh's office.
"There was not a man in that room who asked for anything for himself or for his district," Buck said. "If anybody intimates we were trying to get something out of it that is a total, blatant falsehood."
Tax opponents have said Naifeh was making deals with fence-sitting lawmakers in exchange for income tax votes.
Others who voted "no" but who were expected to vote "yes" included Reps. Pete Phillips, Mary Pruitt, George Fraley, Chris Newton and John Mark Windle. All except Newton are Democrats.
Newton said he never promised to vote for the tax but that the speaker knew he was willing to raise revenue. He said he planned to go home for the weekend and talk to his constituents.
"I don't want and will not vote for the DOGS budget. With that, we're faced with dipping into K-12 education and higher education. That's where the money is and I cannot do that," he said.
The Downsizing Ongoing Government Services or DOGS budget, would cut about $775 million from current spending levels, including some $400 million from K-12 education.
Pressure to find additional revenue reached a new urgency this year because the state faces a $480 million deficit by June 30. It needs about $800 million in new tax income to fund the same budget again next year, and $1.4 billion to fully fund Gov. Don Sundquist's proposed $9.6 billion budget.
"I wasn't for an income tax, but 54 people are running around like this is a victory. It's not," said Rep. Joe McCord, R-Maryville. "We've still got to get 50 votes for something."
While lawmakers were locked in their struggle over the tax vote, a crowd of anti-tax demonstrators outside the Capitol swelled to several hundred as dozens of state troopers, some in riot gear, maintained order.
Last year, three windows were broken and protesters pounded on chamber doors when it appeared lawmakers might vote on an income tax. They didn't. Wednesday's vote was the first taken on an income tax on the floor of either chamber in four years of vigorous debates over the state's tax system.
Naifeh said he would not give up on his income tax plan, which would raise an estimated $1.2 billion.
The plan calls for removing state and local sales taxes from food, nonprescription drugs and articles of clothing that cost less than $500. It would eliminate the Hall Tax on investment income but included half of taxpayers' capital gains as taxable income.
Taxes on liquor, beer and wine would increase 10 percent, and on cigarettes from 13 cents to 20 cents a pack.
The income tax would not apply to single filers' first $15,000 of annual income; married couples filing jointly, $30,000; and single heads of households, $22,050. Each dependent carries a $1,500 deduction.
The state income tax is deductible from federal income tax returns. MY NOTE: ONLY 20% of Tennessean file long form and that is what you have to do to get a tax credit for this puppy..@ 15 cents on the dollar)
The tax was set to go into effect Jan. 1. As a bridge, the sales tax would have gone up by a penny, to 7 cents on the dollar, from July 1 until Dec. 31.
Along with revenue options, the Legislature is running out of days.
The state's Constitution allows the General Assembly 90 paid days of floor meetings during the two-year legislative session; Wednesday marked the 88th legislative day. After 90 days, they work without pay.
The income tax bill is HB2957/SB2646.
800-449-8366 + 1 + the last 4 digits of their legislative office or 615-741-3011 (capitol switchboard). If you live in a bordering State and work in TN YOUR INCOME WILL BE SUBJECTED TO THIS INCOME TAX. HELP US DEFEAT IT! BE THERE WEDNESDAY IF YOU CAN. MAKE PHONE CALLS OR EMAILS. PROTECT YOUR PAY CHECK.
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