Tennessee Tax Protest: A Report from the Front Lines

Published August 1, 2001

Police cars blockaded entrances to the Tennessee state capitol building, and troopers patrolled legislative hallways this week as the state legislature found itself under siege by thousands of angry taxpayers upset at a plan to implement a state income tax.

Tennessee is currently one of only nine states without a state income tax. Opponents of the measure, which would assess a 5 percent tax on any income above $100,000, are skeptical that legislators would maintain that high an exemption threshold for very long.

Tax Protest Déja Vù

As protestors began to gather outside the legislative chambers Monday evening, several legislators were taken away by ambulance and hospitalized for blood pressure and heart problems as tensions rose and tempers flared.

By Tuesday morning, tax protestors were brandishing signs reading, “Let’s send them all to the ER!”

On Friday evening, the state income tax proposal emerged from a legislative conference committee considering the state budget . . . after local news shows had already aired.

Legislators supporting the income tax proposal had hoped a vote would be taken on Saturday morning to avoid giving anti-tax groups time to mount a repeat of the tax revolt that occurred last November, when an earlier income tax measure died as taxpayers besieged legislative offices with tens of thousands of calls and emails every hour.

Talk Radio Fans Flames of Protest

But the hopes of income tax supporters were dashed when two of Nashville’s competing talk radio stations, WLAC and WTN, joined forces and served as the catalyst for opposition to the legislative proposal.

Speaking to WorldNetDaily and barely audible above the virtually non-stop horn honking, WLAC’s morning show host Steve Gill gestured to the standstill traffic encircling the state capitol and said, “Do you hear that? That’s the sound of freedom.”

Phil Valentine, Gill’s afternoon show counterpart, chided legislators on-air for conducting most of the legislative discussion regarding the state budget behind closed doors.

“If this is such good public policy, why are they afraid to do it in public?” Valentine asked.

While it appeared Monday that income tax supporters had enough votes to push the measure through both houses, support crumbled as the tax protests grew.

“These legislators have received a rude awakening in the past few days,” said Darryl Ankarlo, morning drive-time host for WTN. “They’re realizing that taxpayers are tired of politicians picking their pockets at every turn.”

Ankarlo and his WTN colleague, Dave Ramsey, began broadcasting their respective programs from a remote radio site located at the entrance of the legislative plaza, where they could wave to supporters driving by. They would regularly announce on-air the position of state legislators on the income tax proposal and provide telephone and email information for constituents to contact their representatives.

Governor Reneges on No-Tax Promise

The effort to pass a state income tax was led by Republican Gov. Don Sundquist, who won two gubernatorial races handily in 1994 and 1998 after promising to prevent an income tax from ever being passed. But less than three months after his 1998 re-election, Sundquist found that a runaway budget, driven by the largest state Medicaid program in the country, threatened to bankrupt the state.

TennCare, the state’s Medicaid program, now covers one out of every four citizens in the state and consumes one-quarter of the state’s annual budget.

Rejecting calls to cut his proposed $18.1 billion budget, Sundquist threatened to withhold public works projects in legislators’ districts if they failed to go along with his plan. Sundquist was backed by a coalition of liberal special-interest groups, state contractors, road builders, and state employee unions, who are pushing for the income tax to finance a 6 percent pay raise for the coming fiscal year.

One group, Tennesseans for Fair Taxation, praised the current tax proposal as the first step toward imposing a state income tax on the whole population, not just those earning more than $100,000.

“We will continue to push forward until we achieve comprehensive tax reform,” said Nan Lloyd, a Tennesseans for Fair Taxation spokesperson. The organization has even posted an online tax calculator to tell families how much more they would end up paying under various state income-tax schemes.

One national taxpayer group has jumped into the Tennessee tax fight. Chad Cowan, director of communications for the Washington, DC-based Americans for Tax Reform, told WorldNetDaily that Tennessee legislators who vowed at election time to oppose the state income tax need to keep their promises.

“The people of Tennessee have spoken, and they have said loudly and clearly that they do not want a state income tax. The governor and legislature would be wise to listen to them,” Cowan said.

“Villain of the Month”

Americans for Tax Reform named Sundquist “Taxpayer Villain of the Month” last November in response to his recommended state income tax plan and corresponding $400 million state spending increase. Sundquist’s income tax effort was also panned recently by Steve Moore, a columnist for National Review, who labeled Sundquist “easily the worst governor in America.”

The income tax proposal appeared dead, at least for another legislative session, after the tax measure’s chief supporter announced he was throwing in the towel. Both houses subsequently referred the budget back to the conference committee responsible for crafting a compromise. Committee members were given explicit instructions to return with a bill that would meet legislative (and voter) approval. Sundquist has threatened to veto any budget that does not include an income tax, but only a simple majority vote in both houses is needed to override the governor’s veto. Most of the members in both the house and senate face re-election in November.

As word of the income tax’s demise spread among the crowd gathered at the state capitol Tuesday night, car horns continued to blare and traffic remained at a standstill. One protestor, who said he had taken the day off work and had driven three hours to come to Nashville, spoke to WorldNetDaily as the crowd thinned and the sun began to set over the Nashville skyline.

“This is a great victory for all Tennesseans,” he said. “The people spoke, and we forced our elected representatives to listen. Could anything be more American?”

Patrick S. Poole is a researcher and policy analyst with the Tennessee Public Policy Institute.