Anti-tax activist plans push to lower Hall income tax, Grover Norquist wants Tennessee to cut tax on investment income, halt union move

January 21, 2014

Anti-tax activist plans push to lower Hall income tax

Grover Norquist wants Tennessee to cut tax on investment income, halt union move

By Chas Sisk
csisk@tennessean.com

Anti-tax activist Grover Norquist said his organization plans to make rolling back Tennessee’s tax on investment income and blocking worker representation at Volkswagen’s plant in Chattanooga two top priorities, as the group attempts to spread its influence outside Washington.

The leader of Americans for Tax Reform told The Tennessean editorial board Monday that it will support long-discussed legislation to scale back the state’s Hall investment tax this spring and might even use its political prowess to pressure lawmakers to pass the cut. Norquist also said he wants to stop efforts to form a works council at Volkswagen, a step short of unionization that is common in German manufacturers.

The longtime conservative activist said both actions are needed to maintain Tennessee’s competitiveness in an environment in which states are vying to outdo one another in offering tax cuts, reforming their public pensions and revamping their education system.

Norquist’s involvement in Tennessee politics comes as tax-cut efforts in Washington have ground to a halt, a development that he blamed on gridlock and strategic mistakes. It also comes as Tennessee faces a $176 million shortfall in tax collections, which Norquist blamed on a state government that is too large for its budget.

“You don’t have a shortfall. Your government spends too much money,” he said. “It’s not that the peasants aren’t sending too much to the monarch. It’s that the monarch is spending too much money.”

Norquist praised tax-cutting efforts in other states but shied away from discussing some of the specific budget challenges facing Tennessee Gov. Bill Haslam, including funding shortfalls at the Department of Intellectual and Developmental Disabilities.

The campaigns aren’t Americans for Tax Reform’s first in Tennessee. In recent years they have been involved in successful efforts to defeat proposed fees on cable companies and a bill that would have required booking agents to collect hotel taxes.

But the organization’s level of involvement appears to be on the rise. Norquist said he met Monday with supporters of a Hall tax cut to try to get them behind a measure filed by state Sen. Mark Green, R-Clarksville, that would cut the tax gradually from the state’s current 6 percent levy on dividends and investment income to 2.25 percent in 2018.

Green’s measure would designate the remaining tax revenue from the Hall tax for local governments, heading off opposition from communities that depend on the revenue to fund services. Norquist said he hopes those governments then give up that revenue on their own.

Norquist also plans to speak to a group today Tuesday in Chattanooga about the harm that he believes would come to Tennessee’s reputation as a right-to-work state if Volkswagen were to adopt a works council.

More trips to the state will follow, he said.

Tennessee needs to take such actions, Norquist said, to show it remains friendly to businesses looking to invest. He set aside recent actions the state has taken in that direction — a list that includes the elimination of Tennessee’s estate tax, efforts to raise education standards and increase accountability among teachers, the state’s workforce reductions from nearly 50,000 workers in 2008 to fewer than 44,000 in 2013, and an effort to shift public workers from lifetime pensions to retirement accounts.

“The competitive nature between the states has heated up,” he said. “I think it’s part of maintaining Tennessee’s strength.”

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