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Permanent Income Tax Ban for TN Fails

June 8, 2010

NASHVILLE, Tenn. - Supporters of a state income tax call it a small victory, but they know the current political climate isn't favorable to make major changes in the state's tax structure right now. An effort to amend the Tennessee constitution to permanently prohibit the institution of such a tax failed in a state legislature budget subcommittee late last week.

Tennesseans for Fair Taxation mid-state organizer Bill Howell says he's glad lawmakers chose to leave the door open a crack in case extraordinarily dire economic circumstances hit the state.

"I think that's why the house budget subcommittee refused to act on that. They understood that it's impossible to predict what circumstances may occur in the future and when there might be a real serious need to diversify our tax structure."

Howell says opponents of a personal income tax hoped to end the possibility of such a tax once and for all.

"What the constitution does at this point is to specifically allow a tax on income from stocks and bonds. It does not rule out other types of income tax."

Seven states have no state income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Two others, New Hampshire and Tennessee, tax only dividend and interest income.

Randy O'Brien, Public News Service - TN