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The Koch brothers take on Tennessee’s Republican governor


The pledge to repeal Tennessee’s Hall income tax. More than 92 legislators have signed on. (Americans for Prosperity’s Tennessee chapter)

Just over two thirds of  Tennessee’s legislators have signed a pledge to repeal the state’s income tax, and the group behind it is attacking Republican Gov. Bill Haslam for not going along.

So far, 92 of the state’s 132 lawmakers have signed a large-format pledge (above) to repeal the state’s income tax, according to the Tennessee chapter of Americans for Prosperity, a federation of state chapters funded and founded by the billionaire Koch brothers. Votes on bills to reduce and repeal the tax are expected early next week ahead of the session’s adjournment.

In addition to collecting the signatures, the group is also airing a 30-second radio ad (embedded below) criticizing  Haslam for resisting the repeal. In it, they argue that the repeal would help the elderly who are disproportionately affected by the tax, which targets interest from bonds, notes and stock dividends.

“Governor Haslam doesn’t think our seniors should get tax relief,” an announcer says in the ad, urging residents to call his office. “Governor Haslam is blocking tax cuts that would help those that need it most.”

The ad is running on average three times an hour on about half a dozen stations, including some in Nashville and Knoxville, says Andrew Ogles, director for Americans for Prosperity Tennessee.

Haslam last year pushed for and signed an expanded exemption to the tax for seniors and has reduced or eliminated several other taxes. But he has repeatedly said that the state cannot afford a repeal. The budget that passed the legislature Thursday “deals with difficult budget realities, and the legislation in question would automatically put the issue above other priorities when revenues come back,” a spokesman said by e-mail.

Tennessee's revenue recovery is relatively on par with the 50-state average. (Screenshot of Pew's Fiscal 50 interactive) Tennessee’s revenue recovery is relatively on par with the 50-state average. (Screenshot of Pew’s Fiscal 50 interactive)

Monthly revenues have consistently fallen short of estimates for the first half of fiscal 2014, with a cumulative shortfall of more than $220 million. Still, the state has enjoyed a revenue recovery relatively on par with the 50-state average.

“Obviously Tennessee has a budget shortfall, but this approach only cuts the income tax in years that we have excess revenue,” Ogles said, adding that only two of the past five years would have qualified for incremental cuts under the plan. “Anyone that thinks this is fiscally reckless, they just don’t understand the bill. You can’t get much more fiscally cautious than what we’re doing.”

An amended version of a Senate bill cited in the pledge would gradually reduce the income tax, which is also known as the Hall income tax after the legislator behind its 1929 enactment. The current rate of six percent would be cut by one percentage point for every year that state revenue growth exceeds population plus inflation growth. The income tax rate would then freeze at 2.25 unless the General Assembly cuts the tax further. (With so many lawmakers backing a repeal, Ogles says he’s confident one can be incorporated into the bills currently before the legislature before the end of the session.)

The state will likely achieve the required growth to cut the tax over the next few fiscal years, according to official estimates. The amended Senate measure is projected to slash state revenue by $42 million in the 2015-2016 fiscal year and $84 million, $126 million and $157 million in subsequent fiscal years. (Different estimates exist for the House bill.) The bill redirects an increasing share of the collected revenue back to regions where the residents taxed live, so local revenue would grow by $600,000 in the first fiscal year, followed by increases of $1.2 million, $2.2 million and $2.2 million in subsequent years.

In addition to the AFP push, another high-profile conservative is calling for the tax’s repeal: Grover Norquist. In a letter posted online Monday, Norquist warned legislators that  his group “Americans for Tax Reform will be educating your constituents as to how their representatives in the state legislature vote on this important matter.”

Here’s the full text of the pledge:

We the People, As members of the 108th General Assembly in a commitment to making Tennessee an Income Tax Free State, do hereby declare our vote for the repeal of the Hall Income Tax in a fiscally responsible and incremental manner as detailed in Senate Bill 1427 / House Bill 1367

The transcribed radio ad:

Every day, some seniors have to choose between buying necessary medication or buying food. Thankfully, over 92 legislators have committed to help our seniors by repealing the Hall income tax. That’s over two thirds of the legislature. Unfortunately, Governor Haslam doesn’t think our seniors should get tax relief. Governor Haslam is blocking tax cuts that would help those that need it most. Call governor bill haslam. 615-741-2001. Time seniors deserve a break. Repeal the Hall income tax. Visit afptn.org to find out more.

Niraj Chokshi is a general assignment reporter for The Washington Post.

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