Posted on 07/22/2002 11:59:25 AM PDT by Stand Watch Listen
Despite expert predictions that Tennessee would be the next to fall to a state income tax, state legislators dodged that bullet one more time, but not without a price, turning the antitax activists' success into a Pyrrhic victory at best.
"Lots of blood on the floor." That's how one Tennessee legislator described the end of the state's latest budget debacle, a four-year struggle that culminated this year in shouted insults, death threats, a partial government shutdown that put 22,000 state employees on furlough and the largest tax increase in Tennessee history.
The Tennessee budget situation has drawn national attention for two years, primarily due to attempts by Republican Gov. Don Sundquist to introduce a state income tax to relieve a mounting budget deficit [see "Tennessee Tax Fight a Warning to Others," Dec. 10, 2001]. "We've been fighting the same war for four years," House Minority Leader Steve McDaniel, a Republican, tells Insight.
For three years legislators have raided every conceivable fund to make up the difference, including the state's Rainy Day fund, and boosted the sales tax in "temporary" increments that never were repealed. Yet, despite an annual tussle to make up a deficit, legislators have continued to pass budgets marked by increased spending.
Tennessee is one of eight states that doesn't have some form of tax on personal income.
Enter Sundquist and the income tax. Once a staunch opponent of income taxes, he launched a drive last summer to convince both the public and the legislators that a tax on personal income was the only viable method of meeting the state's spending deficit. That brought antitax protesters out in droves, forcing them into well-publicized skirmishes with police and spawning exaggerated reports of destruction to the state Capitol.
This year, with virtually the entire legislative and executive leadership of the state backing some form of income tax, legislators were forced to cope with a $400 million deficit from the 2001-2002 budget and a projected $800 million deficit for the coming year. The split came between those who believe new revenue is essential and those who claim that cuts in a grossly overinflated budget could solve the problem.
At one juncture, the legislators were faced with a DOGS (downsizing of government services) budget, which included no new revenue and massive cuts in current programs, and a CATS (continuation of adequate taxes and services) budget, a middle-of-the-road venture that included some cuts and the redirection of sales tax now collected by cities and counties.
With protesters and talk-show hosts crowding around the state Capitol, charges and countercharges flooded the legislative chambers this spring and early summer. The rhetoric turned ugly and then vicious, with death threats being made to income-tax supporters such as House Speaker Jimmy Naifeh and state Sen. Bob Rochelle, both Democrats. Naifeh was able to guide his income-tax proposal to within five votes of a House victory in May with the aid of five Republican legislators who crossed party lines to vote for the measure.
Many legislators based their opposition to the Naifeh income-tax plan, which would have eliminated much of the state's sales-tax scheme, on a "no-tax" pledge they took during the last election. Privately, those representatives acknowledged that it was a matter of political survival. One of Naifeh's unofficial lobbyists, speaking on condition of anonymity, tells Insight that he got the same song everywhere he went. "They all said the same thing," the source notes. "'I know the income tax is the best idea, but if I vote for it, I won't get re-elected.'"
House Democratic Caucus Chairman Randy Rinks echoed that sentiment. "People were voting for their political survival," Rinks tells Insight. "They weren't voting for the good of the state."
Although antitax protesters made their presence known, it was the income-tax supporters who made the most noise as the state Legislature eyed its deadline, midnight on June 30, when the new fiscal year began. A compromise measure that would have instituted a 3.75 percent income tax and a constitutional convention on tax reform passed the Senate but was derailed in the House, where Naifeh attacked it vehemently. "The Senate didn't try to do a thing but rush something over to the House all for show, to make us look bad. We've passed a revenue bill. They passed a piece of garbage," Naifeh told the legislators.
As zero hour approached, the legislators were no nearer a budget, forcing Gov. Sundquist to take the unprecedented step of furloughing 22,000 "nonessential" employees and shutting down most of the state government.
The contingency bill allowed prisons, the Highway Patrol, mental-health services, child-support services and TennCare, the state's health-care program for the poor and uninsured, to continue to function for five days. Driver's-license offices and the Department of Tourist Development were completely shut down for the week, and the highway department halted all road construction; state contractors felt the pinch and layoffs in that industry ensued. State colleges and universities suspended or postponed classes.
For three days the state languished in shutdown mode. Efforts to resurrect the CATS plan failed and Naifeh refused to dust off his 4.5 percent income-tax proposal. By the end of business on July 3, both the people and the legislators were tired of the impasse. Democratic state Sen. Jerry Cooper, working with business lobbyists, proposed a 1-cent increase in the state's sales tax on all items but food, which would remain stable, as well as increases in the so-called "sin" taxes on tobacco and alcohol.
In a flurry of activity late that day, the Cooper plan was hustled through the Legislature, passing the House at 7:20 p.m. and signed soon after by Sundquist. With 43 of Tennessee's 95 counties bordering states with lower tax rates and the continued growth of Internet-based sales, revenue from the increase will not meet its $933 million projection. Some counties and cities, exercising their local option, will have sales-tax rates nearing 10 percent.
Although protesters succeeded in holding the line against a state income tax, their aim was so narrow that it was they who gave legislators enough wiggle room to pass a sales-tax hike that, according to the Federation of Tax Administrators, will boost Tennessee to the third most expensively taxed state in the United States, surpassed only by Rhode Island and Texas. When local options are added in, the federation says, it gives the Volunteer State the highest average sales tax in the nation.
And the budget Tennesseans will live under for the next year? State Sen. Jim Kyle, a Memphis Democrat who sponsored a pre-shutdown income-tax plan, described it as a "status quo budget with pay raises."
Strangely, however, Kyle told The Tennessean of Nashville, "It ratified the fact that spending is not out of control." Others note that TennCare — the Hillary Clinton-inspired health-care system blamed by antitaxers such as activist Mike Croteau, Tennessee Libertarian Party chief Ray Ledford and talk-show host Phil Valentine for the bulk of the state's budget dilemma — received an additional $144 million.
Linda McCarty, executive director of the Tennessee State Employees Association, has nothing nice to say about the tax plan. "It's an extremely large, regressive tax increase on middle- and lower-income Tennesseans," McCarty says. "It is a short-term plan that gets them home quickly."
Naifeh lieutenant Rinks expressed his frustration to Insight: "In the end you had 95 members voting for a huge tax increase — 45 voted for an income tax and 47 voted for sales tax. Forty-five voted for a long-term fix and 47 were trying to get re-elected. But it took the partial shutdown to get the anti-income-tax members to vote for anything."
Although the Associated Press and local media ballyhooed the new budget as the end of a four-year debacle, no one else with whom Insight spoke in Tennessee sees it as anything but another step on the ladder of escalating taxes. The income tax certainly is not dead, according to Republican state Sen. Ben Atchley. "It may come back out of necessity," he says. But, Tennessee does have a new budget, and with it the largest tax increase in the state's history. With the downturn in the economy, other states are looking at similar problems.
Tony Hays is a free-lance writer for Insight.
Second off I would favor a lowered spending budget. More taxes to raise more money to build a bigger government and make a great big "mommy" state? When will people wake up and realize that their freedom is at risk here.
Also at risk is their prosperity and well-being.
As long as State and Federal governments continue to extort income-tax from the productive working class and creative business community the parasitical-politicians and self-serving bureaucrats will never run out of ways to spend that money to the net harm of the working class, the business community and society in general. If it's not the Democrats it's the Republicans -- usually both.
As Mr. Brown used to joking say to us neighborhood kids, "Which do you want, a fat lip or a busted eyebrow." That was not lost on me. From Democrats you get one, from Republicans you get the other. Voting for the lesser of evils still begets evil.
The Genie is Out of the Bottle
Congress has created so many laws that virtually every person is assured of breaking more than just traffic laws. Surely with all this supposed lawlessness people and society should have long ago run head long into destruction. But it has not.
Instead, people and society have progressively prospered. Doing so despite politicians creating on average, 3,000 new laws each year which self-serving alphabet-agency bureaucrats implement/utilize to justify their usurped power and unearned paychecks. They both proclaim from on high -- with complicit endorsement from the media and academia -- that all those laws are "must-have" laws to thwart people and society from running headlong into self-destruction.
Again, despite not having this year's 3,000 must-have laws people and society increased prosperity for years and decades prior. How can it be that suddenly the people and the society they form has managed to be so prosperous for so long but suddenly they will run such great risk of destroying their self-created prosperity?
The government is the all time champion of cooking the books and it has the gall to point fingers at the whole business community because of a few bad apples. The entire business community and employees that support it should stand tall against a government feigning to protect the little guy from organizations that cook their books.
If there was ever a prime example of the fox guarding the hen house it is the government claiming to protect the little guy from organizations that cook their books. President Bush will have to militarily smash down terrorism. For that is his job. It's not the President's, congress' or the government's job to manipulate the economy.
The business community with their employees will have to stand tall against the PC-status-quo fox -- self-proclaimed authorities claiming/feigning they'll use the government to protect the little guy and a complicit media and academia that supports them; for they are all the fox -- to regain their rightful place as the champions of honest business that has always increased the well-being of people.
The government, having already manipulated the economy to almost no-end, President Bush can play the unbeatable five-ace hand of replacing the threat-of-force IRS and graduated income tax with a don't-pay-the-tax-if-you-don't-want-to consumption tax. For example, implement the proposed national retail sales tax (NRST). Not only would that win votes for Bush and republicans in congress it would boom the economy.
Where will it lead?
War of Two Worlds
Value Creators versus Value Destroyers
Politics is not the solution. It's the problem!
The first thing civilization must have is business/science. It's what the family needs so that its members can live creative, productive, happy lives. Business/science can survive, even thrive without government/bureaucracy.
Government/bureaucracy cannot survive without business/science. In general, business/science and family is the host and government/bureaucracy is a parasite.
Aside from that, keep valid government services that protect individual rights and property. Military defense, FBI, CIA, police and courts. With the rest of government striped away those few valid services would be several fold more efficient and effective than they are today.
Underwriters Laboratory is a private sector business that has to compete in a capitalist market. Underwriters laboratory is a good example of success where government fails.
Any government agency that is a value to the people and society -- which there are but a few -- could better serve the people by being in the private sector where competition demands maximum performance.
Wake up! They are the parasites. We are the host. We don't need them. They need us.
* * *
After all, in calling for the resignation of Securities and Exchange Commissioner Harvey Pitt, McCain declares, “Government’s demands for corporate accountability are only credible if government executives are held accountable as well." Does that mean U.S. senators? Congress, Accounting, and the Free Market (McCain is grandstanding again)
"Too often, we have cooked the books, exploited off-balance sheet accounting, fudged budget numbers and failed to disclose fully the nation's assets and liabilities. If we in Washington are to have credibility in the public eye as we address the corporate accounting mess, we must reform our own fiscal practices," said McCain. Social Security Called A Bigger Fraud Than Corporate Scandals
Prove it first. It's not like it's a new discovery or problem. It's a seventy-year-old problem. It's just that now politicians and bureaucrats have trapped themselves and the general public is becoming increasingly aware. They've been caught and McCain is getting interview time to peddle gussied-up compassionate government.
"Allowing Americans to invest responsibly a small part of their payroll taxes will not only save Social Security, but will provide them with greater retirement income than those who no or will soon depend on Social Security checks," said McCain. Social Security Called A Bigger Fraud Than Corporate Scandals
Notice McCain so readily self-proclaims himself and government the authority to allow Americans to invest part of their own money. But he has a condition; it most be done responsibly. And who decides what is responsible? Certainly not the all-time champion, cook-the-books bureaucrats and snake-oil-salesmen politicians.
They -- self-proclaimed authorities -- are running citizens and society headlong into destruction.
I was on the front lines of this day after day. This is a typical DemoNAZI lie of omission. The reason the anti-taxers didn't vote FOR anything is that Naifeh literally blocked ANY legislation that contained anything other than an income tax until the very end. He literally gave them nothing to vote on. The subject of spending cuts was quickly hushed by the DemoNAZI controlled committees and never allowed to see the light of day.
Unless you were here, you can even imagine to lies, threats, deceit, and payoffs that were going on.
You said a mouthful there. We were able to fend off the income tax and the constitutional challenge that would have followed, for now. We can only hope that next year, with a new Governor as well as a new group of legislators (Maybe no Naifeh, definately no Rochelle)some real changes can be made. The pulic opinion ball is rolling for cutbacks in govenment for everything from Tenncare to a runaway TDOT. This battle at least pointed out some of the silliness in our tax code, now if we can only point out some sillyness in our spending. (176 million of "miscellaneous" expenses not on the books would be a good place to start)
Solution...cut the budget. And the pay raises. Problem solved.
Nebraska finally caught on after it had already lost some of its biggest industries and started suffering what for them were enormous unemployment figures.
Bottom line is you can't spend more than you can economically extort from the public unless you have the power to print money. Of course, that just delays the problem to a later date.
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