Posted on 05/05/2002 5:08:35 AM PDT by GailA
Westmoreland to back Naifeh plan if exchange tax concept doesn't garner House support
By TIM WHALEY
KINGSPORT - No matter what budget solution the House arrives at, state Rep. Keith Westmoreland, R-Kingsport, said 49 members of the House and two leading gubernatorial candidates "will be very happy.''
That's because they won't have to make a decision or present a plan to balance a budget deficit now projected at $1.4 billion if any improvements are included at all.
Even a base continuation budget would cost the state as much as $800 million due to the use of one-time monies and deflating tax collections.
"Forty-nine House members and two gubernatorial candidates can sit back fat, dumb and happy and never have to come to the front and present a plan that pulls Tennessee back from the abyss," Westmoreland said.
Westmoreland has formally presented his "singular exchange tax plan" to the House Finance Committee and has declared his support for House Speaker Jimmy Naifeh's 4.5 percent flat income tax plan if his plan fails.
Westmoreland's sweeping measure would cut the state sales tax rate to 3.25 percent and the local-option sales tax to 1.25 percent for an effective combined state/local rate of 4.5 percent.
That's down from as much as 8.75 percent under the current sales tax system.
But the new sales tax would be applied to an expanded base, including all goods and services except for medical services, business and farm input materials, and items purchased for resale.
At the same time, the Westmoreland plan would implement a 3.25 percent flat income or "exchange" tax on business and personal income. There would be no exemptions under this plan.
The singular exchange tax would eliminate the existing franchise/excise tax, the Hall income tax on investment income, the inheritance tax, gross receipts tax, severance tax, and coin-amusement tax. "I indicated to Speaker Naifeh that I was not bringing this plan as an adversarial position, but simply to try to raise sufficient funds to provide the basic services of the state of Tennessee," Westmoreland said. "I also told the speaker if my plan doesn't go and his is the only thing left standing, I would support that position. That's what it's going to take to put the state back on even keel, regardless of what gubernatorial candidates are saying."
Naifeh is championing a 4.5 percent flat income tax with exemptions of $15,000 per single filer and $30,000 for married couples.
Naifeh, whose plan also taxes long-term capital gains at 2.25 percent, told teachers this week that he expects the plan to pass sometime this month.
But Westmoreland said Thursday he isn't so sure the measure will gain the 50 votes needed to pass in the House.
"With all the counting going on, it looks there might be 45 or 46 votes, and those last votes are going to be very difficult to come by," Westmoreland said. "But I don't think it's ever going to get to the floor. And I haven't given up on my plan, either."
While the Naifeh plan currently garners eight Republican votes, including his own, Westmoreland said his plan might be able to garner 13 or 14 Republican votes.
Westmoreland's plan raises about $1.3 billion, just about enough to cover the governor's proposed budget, the revenue shortfall, and restore fund balances that will be raided to balance the current 2002 budget.
"This makes only modest improvements in education and replenishes the rainy day fund," Westmoreland said. "It will also move those programs out of the nonrecurring category, including human resource agencies, fire and police pay supplements, and school safety programs. We need to get those back into the recurring budget."
Westmoreland said his plan generated interest in the House Finance Committee, although there is "some reluctance to pass something that has never been tried before."
"Regardless of whether it passes this year, I think somebody in the future is going to look at this plan as a good way of going about tax reform."
5/2/02 The Nashville City Paper
Jimmy Naifeh, speaker of the House, surrounded by a score of legislators, told the crowd, “Those horn-honkers don’t bother me worth a damn! I would rather be dealing with real people like you, people who work for a living.”
The crowd applauded when Naifeh said he was “very hopeful” the General Assembly could pass tax reform “in the month of May.”
Rep (David Davis), with the agreement of Crowe and Patton, said a shortfall in the current budget of upwards of $350 million is a "real deficit,'' while past budgets "artificially" inflated expenditures to produce a deficit. (The Kingsport Times)
Representative Westmoreland: I have recently been redistricted into District 2 and have been following your positions on state tax issues. I wish you to realize that I, as your constituent, oppose any change in appropriation of tax revenue, specifically an income tax. The governor and legislators of Tennessee have proven themselves unwilling and unable to define projects such as TennCare within a budget the state can afford and likewise have chosen not to address the horrendous spending, waste, and/or fraud within this and other state programs. The people deserve adequate funding of well-conceived and executed projects, not to bear the financial brunt of political boondoggles such as TennCare. While I pay for an unheard of proportion of the state’s population (with a generous addition of fraudsters from in and out-of-state) to access poorly administered health care and for former Representative Ford to carry home millions in “consulting fees”, the state’s educational system languishes near the bottom among the fifty states and industry shies away from a state with such poor governance.
In short: 1. The ineptitude of the legislative and executive branches of the government of Tennessee is the problem, not a paucity of tax revenue. Fix the programs you have created, and a tax increase is not needed. 2. Your constituents need to know of their Republican representative exactly what part of “no income tax” you fail to understand. Sincerely,
Tennessee’s governance has become a sad joke nationally with recruiting firms unable to interest employees in exploring what the state has to offer due to national coverage of the ineffectual legislature and governor, and the horrors of TennCare, not to mention the consistent defiance of the will of the people by elected representatives in Nashville. I am in contact with multi-state recruiting firms on a weekly basis and this is their unsolicited opinion of our national image. In short: 1. Our governance is a disgrace. We know it and the country knows it. This hurts the state now and into the future. It will take years of positive work to overcome our negative image. 2. The ineptitude of the legislative and executive branches of the government of Tennessee is the problem, not a paucity of tax revenue. Fix the programs you have created, and a tax increase is not needed. 3. You and our other legislators are not in office to pursue a separate, elitist agenda with tax dollars. The people say they want TennCare fixed, education bettered, and no income tax. Do it. It’s your job. If you do not respect your constituents, leave the office. 4. Your constituents need to know of their Republican representative exactly what part of “no income tax” you fail to understand.
And next year or the year after that, these scumbags will simply raise the sales taxes right back up. I sure hope the Tennessee electorate has the guts and the fortitutde to bury any politician, like this clown Westmoreland, who supports this disgraceful con-job. Don't let these scumbags wear you down.
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