Tennessee’s constitutional amendment on taxation

Policymakers in Illinois spent this spring debating whether the state should adopt a progressive tax scheme. At one point, there were as many as seven different tax structures being considered in Illinois. Supporters of the progressive tax fought for an amendment to the Illinois Constitution to allow such a change. Their efforts were rejected, and,...

Policymakers in Illinois spent this spring debating whether the state should adopt a progressive tax scheme. At one point, there were as many as seven different tax structures being considered in Illinois.

Supporters of the progressive tax fought for an amendment to the Illinois Constitution to allow such a change. Their efforts were rejected, and, at least for now, progressive taxation is dead in Illinois.

Meanwhile, legislators in Tennessee have been quietly considering their own constitutional amendment on taxation. And this one is likely to become constitutional law.

Tennessee’s amendment is to prohibit any taxation of income. Part of it reads:

“… the Legislature shall not levy, authorize or otherwise permit any state or local tax upon payroll or earned personal income”

Tennessee’s General Assembly passed Senate Joint Resolution 1 in two consecutive legislative sessions with overwhelming majorities. This November, the resolution will be put before Tennessee voters as a constitutional amendment. It is likely to pass.

Income taxation in Tennessee would become banned by constitutional amendment.

The resolution gives one reason why this amendment is needed. Here it is:

“WHEREAS, not having a state income tax has brought jobs to Tennessee, and clarifying this prohibition will help Tennessee become the number one state in the southeast for high quality jobs.”

The Tennessee Legislature understands a simple fact. If you want jobs, don’t tax work.

Illinois should take a lesson from Tennessee. Illinois’ General Assembly spent the spring debating various tax schemes. Now they are debating whether to hike the income tax again in 2015, even after seeing the crippling effects of Illinois’ 2011 tax hike.

Other states are having a different discussion altogether. Once the discussion to eliminate the income tax moves into the Great Lakes region, Illinois’ borders will come under greater threat.

Now is when Illinois has a chance to lead rather than to follow. Illinois should sunset its 2011 tax hike, and then transition away from taxing income altogether.