February 26, 2005

Employer Priviledge Tax?

And I thought that Naifeh said the income tax issue was dead. Of course, considering the biased Income Tax Study Commission recommended instituting an income tax (without recommending any type of spending reform), that may not be entirely true.

So...Up pops HB2027 by sponsored by Rep. Mike Kernell (D-Memphis).

*HB2027 by *Kernell.

Taxes, Privilege - Enacts a 1 percent privilege tax on employer's payroll and dedicates revenue to funding special payments to certain hospitals and funding some portion of a reenacted Tennessee Comprehensive Health Insurance Pool. - Amends TCA Title 4; Title 6; Title 56; Title 57; Title 67; Title 68; and Title 71

Well, actually, it's not an income tax in definition. It's an "employer priviledge tax." That's just a fancy phrase for a tax that would implement a taxation on an employer's payroll. In this case, 1%.

The text of the bill reads like a bleeding heart's pity party for TennCare. This almost leads me to believe the bill was written as a means to push TennCare reform along in a "if TennCare isn't going to be fixed, we have to raise taxes" kind of way.

Apparently 1/2 of the money would go to hospitals providing uncompensated services and the other half would go to the "Tennessee Comprehensive Health Insurance Pool." It's not known how they would pay for the additional staff to implement such a redistribution system.

This bill was only filed in the last few days, and it may not have a chance of going anywhere, but you always have to keep an eye on these things and remain diligent.

In theory (and this is what, I'm sure, legislators would bank on), this would not affect taxpayers directly. But as always, when it comes to government and taxation, what you don't know CAN hurt you. When businesses are taxed, it not only affects everyone who lies underneath the taxed entity but it also tends to stiffle business/economic growth. Plus, who is to say that it will stay at 1%...or that it won't eventually be passed on to workers directly?

This is just another example of legislators looking for the easy way out of a budget situation. Instead of tackling the issue that is causing the problem (spending), they seek more revenue from the taxpayers (yes, businesses are taxpayers too).

Stay tuned, and be sure to contact your legislators (here) to make your voice heard.

You can contact Rep. Kernell via email (rep.mike.kernell@legislature.state.tn.us; via phone - (615) 741-3726; or via fax - (615) 741-8752.

Thanks to Michael Silence for the heads up.

Update: Bill Hobbs has more.

Update 2:

Another bill filed by Rep. Kernell...this one would be considered a full blown income tax:

*HB2120 by *Kernell.

Taxes - Enacts the "Tennessee Investment and Economic Development Act"; reduces the general state sales tax from 7 percent to 4 percent; eliminates the Hall Income Tax and state and local sales tax on food; imposes graduated income tax; holds local government harmless for loss of revenue from reduction in sales tax. - Amends TCA Title 3; Title 4; Title 5; Title 6; Title 7; Title 8; Title 9; Title 12; Title 16; Title 30; Title 36; Title 39; Title 40; Title 45; Title 47; Title 48; Title 55; Title 56; Title 57; Title 61; Title 62; Title 67; Title 68; Title 69; Title 70 and Title 71.

"Tennessee Investment and Economic Development Act" ??? Why do politicians name these things in ways that are completely opposite of what they actually are?

Read the entire bill here. The rhetoric used in the language of the bill is laughable.

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Notice tax increases are called investments while tax decreases are a cost or expense? Like Ted Kennedy wants a one time 15% tax on 401k funds to "invest" in urban renewl?

So if this is an investment then where's the taxpayer's ROI.

A good "investment" would be investing time and energy in reducing spending, smaller government or at the least eliminating fraud, waste and abuse.

Posted by: Rick at February 27, 2005 01:26 AM