Talking
points for 2008 Legislative Session
OPEN GOVERNMENT
SB3280McNally/HB3637 McDaniel has dropped any changes to the
sunshine statue concerning open meetings.
It now only addresses the issue of open records. We support these changes.
We should move ahead with public
records changes
1.
Records proposals
actually improve the situation by removing delays.
2.
There was a strong
consensus on the panel who studied the issue.
Votes to delay failed twice
3.
Study recommendations
would make it easier to get public information and new procedures could make it
easier to collect legal fees
4.
Independent analysis
shows law would go from 4th worst to 10th best
5.
OMB is chance to push
for mandatory fees if agency does not consult
6.
Clarifies rules for
records custodians/protects from unreasonable demands
SB 3275 McNally
HB 3636 McDaniel
Open Meetings - Makes various changes to the Open Meetings Law and to the Open Records Law; creates office of ombudsperson. Includes the study committee’s recommendations; would weaken the open meetings law by allowing up to three officials of a body to meet privately to discuss public business.
Senate Status: Referred to Senate
Open Government Subcommittee.
House
Status: Introduced 1/28/2008
Position: Top Priority. Monitor for amendments but do not support as written.
SB 3280 McNally
HB 3637 McDaniel
Open Meetings - Makes various changes to the Open Meetings Law and to the Open Records Law; creates office of ombudsperson. Omits the weakening provisions in SB 3275, and adds five other exemptions including allowing private meetings when school boards are conducting the school director’s performance and when city councils or county commissions are discussing the purchase or sale of property.
Senate Status: Referred to Senate
Open Government Subcommittee.
House Status: Introduced 1/28/2008
Position: Top Priority. Monitor for amendments and
support if the positive open records changes remain but without the negative
open meetings changes.
SB 3593 Burchett
HB 3945
Open Meetings. Makes improvements to existing open meetings act. Includes more controls on what can happen inside executive session (no votes) and requires minutes be kept and made public without information the “executive session” is designed to protect.
Senate Status: Referred to Senate
Open Government Subcommittee.
House Status: Referred to
Position: Top Priority.
Support.
ELECTIONS
SUPPORT FOR SB1363/HB1256 THE VOTER CONFIDENCE ACT OF 2007
Background
·
The
Help America Vote Act of 2002, (HAVA)
mandated reform of the conduct of elections, including
o
Ensuring
that all voters can vote privately and independently regardless of any
disability
o
Authorizing
$57 million to
·
93
of
·
Direct
Recording Electronic voting machines are essentially computers.
o
Votes are recorded and tallied ONLY
inside the machine.
o
Voters
cannot know for sure how their votes were tallied.
·
Like
any computer, electronic voting machine computers are vulnerable to
o
Software
errors, viruses, and hardware malfunction
·
This
bill replaces the existing equipment with OPTICAL
SCAN voting machines
·
With
optical scan voting, voters mark a durable paper ballot that is:
o
Scanned
but also retained by the county
o
Can
be checked by voters that their vote is correctly cast
o
Available
for post-election audits and recounts
·
Thirty-five
other states have passed laws mandating voter verifiable paper ballots
SB 1363 HB 1256 MANDATES VOTER
VERIFIABLE PAPER BALLOT S
·
All voting machines purchased after this
law is enacted will produce or use a paper ballot that the voter can verify
before it is cast, and that is securely retained by the county. In practice,
this means 93 counties will need to discard their current touchscreen
machines and replace them with 1 optical scan voting system in each polling
place.
·
All voting equipment will have secure
electronic systems.
·
Counties will conduct post- election
audits in randomly selected precincts to assure accuracy of election tallies.
·
This bill must be passed as rapidly as
possible to ensure the integrity of the 2008 presidential election.
SB 1363 Haynes
HB 1256
Senate Status:
House Status: Set for
Other Status: Joint Study Committee on Voter Confidence Act deferred to next meeting
Position: Support
SB 2811
HB 3049 Mumpower
Photo identification
required for voting. Requires a voter to present qualified photographic
identification before voting. Specifies that such identification includes a
Senate Status: Referred to
House
Status: Referred to House Elections Subcommittee.
Position: Oppose
ENVIRONMENT
SB 1253 Burchett
HB 0865
Definition of waters excludes narrow run-off ditches. Excludes narrow run-off “ditches” that are dry most of the year from the definition of waters for purposes of the "Water Quality Control Act." The effect is to exempt such wet weather streams from the provisions of the clean water act. The amendment has been dubbed the “Headwaters Pollution Bill” by environmentalists.
Senate Status: Set for Senate Environment, Conservation & Tourism 11/13/2007.
House Status: House Conservation & Environment referred to summer study.
Position: Oppose
SB 3966 Ramsey
HB 2511 Mumpower
Enforcement of environmental law - anonymous tips. Prohibits department of environment and conservation and
related entities from taking action to investigate alleged violations or
enforce any penalties solely on the basis of information received from an
anonymous source. Creates Class A misdemeanor punishable only by a fine for
violations of this part. (22 pp.) We believe this is simply another bill to
prohibit important state regulation of our waters
Senate Status: Referred to Senate Judiciary.
House Status: Introduced 1/10/2008
Position: Oppose
SB 4119 Southerland
HB 4185 McCord
Defines limited resource waters. Defines "limited resource waters" as ephemeral
bodies of water that flow primarily in response to rainfall, for which
groundwater is not a significant source, and that do not support a significant
indigenous population of native fish or aquatic life under the Water
Quality Control Act. Yet another bill to prohibit
important state regulation of our waters.
Senate Status: Referred to Senate Environment,
Conservation & Tourism.
House Status: Referred to House Conservation & Environment. House
Government Operations will review if recommended.
Position: Oppose
Important waters and
lands of the state will be destroyed if this bill passes:
There is a
drought. Headwater streams are often
low-flying, seasonal streams with little to no aquatic life however they
provide much needed flow to adjoining tributaries which eventually flow into
our state’s designated drinking water sources.
LIFTING PROTECTION OF EPHEMERAL WATER BODIES WILL SIGNIFICANTLY REDUCE
THE OVERALL WATER QUANTITY THROUGH OUT THE STATE.
The stream
miles and water bodies determined to not meet their designated uses increases
every year throughout the state. If
passed, this bill will continue this trend to a greater extant. LIFTING PROTECTION OF ANY WATER BODY ONLY
INCREASES THE POTENTIAL OF GREATER DOWNSTREM DESTRUCTION.
Wetlands
are often seasonal water bodies. Since
the 1990’s
Protection
from flooding
Filter
and purify surface waters
Serve
as habitat to a variety of aquatic species
Lifting
protection of these waters also lifts protection of the adjacent lands. A significant portion of ephemeral streams
rest in mountainous areas with seasonal flows unable to support aquatic life
due to the terrain, but these areas have GREAT WORTH AS RECREATIONAL, NATURAL
AND SCENIC AREAS TO BOTH RESIDENTS AND TOURISTS.
SB3822
HB3348
TN Scenic
Summary: This bill is designed to address three problems related to surface coal mining.
Problem One: The Environmental Impact Study (EIS) used to regulate coal mining and related water permits on the state and federal level is over 20 years old. It does not use modern scientific methods nor contemplate current mining methods such as mountain top removal or cross ridge mining. All state and federal permitting decisions for surface coal mining are being made without basic and necessary information. The Governor and Tennessee Department of Environment and Conservation (TDEC) have requested that OSM conduct such a study and have been repeatedly refused.
Solution One: Part (a) of the bill provides that TDEC will not issue or renew any water permits for surface coal mining until there is a new EIS. Conducting an EIS is the responsibility of the federal Office of Surface Mining (OSM). This will create an industry incentive to foster an EIS rather than block one.
Problem Two: OSM
has a regulation that prohibits surface coal mining activities within 100 feet
of either side of a body of water; this is known as the Stream Buffer Zone.
This buffer is designed to minimize the effects of surface coal mining on water
quality. The state enforces the same buffer, but it is a matter of policy only,
and not regulation. OSM is in the process of amending the stream buffer zone to
make it optional. This will create industry pressure on the state stream buffer
zone policy and could result in surface coal mining close to and through
streams, creating an unnecessary and significant degradation of the waters of
the State of
Solution Two: Part
(b)(1) of the bill makes the
Problem Three: There
are currently several surface coal mining sites in
Solution Three: Part (b)(2) prohibits TDEC water permits for surface coal mining that would alter or disturb a ridge line above 2000 feet above sea level.
Bottle Bill
SB 1408/ HB 1829
PRIDE OF PLACE:
A Comprehensive Litter
and Recycling Solution for
By the numbers:
· 11:
states with container deposits (
· 276:
number of years, collectively, that bottle bills have been in effect in the
· 3:
deposit states with an “expanded” beverage list (beer & soda plus bottled
water, juices, energy drinks, etc.)
· 6:
states besides TN currently trying to pass a deposit bill (
· 4.2
billion:
· $106
million: maximum market value of the empty containers
· 85
percent:
· 10
percent:
· 5
cents: amount of proposed deposit (paid by the customer)
· 3
cents: amount of proposed handling fee (paid by the beverage distributor)
· 2.9
lbs:
1.
Bill will create 800+ small businesses in the form of
independent, voluntary redemption centers.
2.
Bill doesn’t require grocers, convenience stores or anyone else
to take back bottles and cans.
3.
Beverage distributors will have no role in collecting,
transporting or recycling empty containers
4.
Bill will reduce beverage-container litter by 80-90 percent and
overall litter by 40-60 percent
5.
Bill will increase funding for litter education, Keep
6.
Bill will increase recycling rates for all household
commodities.
7.
Bill will guarantee the large volumes of “pure” scrap required
by manufacturing industries.
8.
Bill will strengthen curbside recycling.
9.
Bill will not automatically result in higher retail beverage
prices.
10.
Cross-border shopping to avoid the deposit will not be a
significant issue.
11.
Fraudulent returns (i.e., returns on which a deposit was not
paid) will not be a significant issue.
12.
Bill will generate millions in fundraising dollars for schools,
community groups and other nonprofits.
13.
Bill will extend landfill life.
14.
Bill will help preserve
15.
Public support for bottle bills is high.
16.
Bill will enhance existing state programs.
For
more information, visit
www.tnbottlebill.org
TAXES
SB 3158 Burchett
HB 3182 Fitzhugh
Reduction of sales
tax on food and closing of certain business tax loopholes. Note: the
bill, to be titled the “Food and Business Tax Fairness Act,” will further
reduce the sales tax on food (now 5 ˝ %, compared to 7 % for other items). The bill will be revenue neutral, so the
amount of the reduction will be determined by the revenue raised by requiring
combined reporting for multi-state corporations that currently avoid reporting
their earnings in
Senate Status: Referred to Senate Finance Tax Subcommittee
House Status: Introduced 1/17/2008.
Position: Support
Frequently
Asked Questions: Business Income Tax Loopholes
(SB3158Burchett/HB3182
Supplement to
“Achieving a Broadly-Shared Prosperity in TN” www.fairtaxation.org/downloads/foodbizfairness.pdf
Q. Why does
A. We can’t answer this question, but it seems to us that it’s
time for the citizens and especially the business community of Tennessee to
come together to demand that the General Assembly put an end to these tax
breaks.
Q. Why do you say
the food tax is unfair?
A. A
Q. Aren’t Food Stamps and WIC vouchers
exempt from sales tax?
A. Yes, but those are only supplements that do
not provide full nutrition for a family. Also, many low and moderate-income
families do not qualify for those programs.
Q. Isn’t the food
tax the most stable part of TN’s tax system?
A. Stability is not the primary problem with
Business taxes, by comparison, are fairly high-growth taxes over
the long term. Substituting revenue generated by closing corporate tax
loopholes for a portion of the food tax would help make
Q. Isn’t there a budget deficit this year
that would make cutting the food tax difficult?
A. Initially the administration stated its intention to meet the
current budget shortfall by using savings that occur naturally from unfilled
positions, programs that start later than expected or programs that run more
efficiently. However, continuing shortfalls may necessitate budget cuts. While
these are effective short-term solutions, the Food and Business Tax Fairness
Act would help address the long-term budget challenges. It would replace a
portion of the slow-growing food tax with business taxes that are far more
responsive to economic growth. This approach would put our tax system on more
solid fiscal ground as we move forward.
Q. Would cutting the
food tax make a TN personal income tax necessary?
A. TFT believes that the creation of a balanced, common sense
tax system will ultimately require a state income tax, as part of a
comprehensive tax-restructuring package. The issue of a comprehensive tax
package, however, is a much larger debate than whether or not we should cut the
state food tax.
In practice, there is little connection between states that tax
food and states that have an income tax. Of the 9 states without a broad-based
income tax, only 2 tax food (
Q. How would the
Food & Business Tax Fairness Act benefit
A. Small and medium-sized businesses that operate only in
If all multi-state corporations paid their full tax obligations,
we could all pay less tax on our food, and future tax increases could be
delayed or avoided altogether. Also, businesses that compete directly with
large multi-state corporations might be able to compete more effectively when their
competitors have the same tax obligations.
Q. How do you plan
to close the loopholes?
A. There is a mechanism called “combined reporting” that is now
the law in 21 of the 45 states that have a corporate income tax. Those 21
states represent more than 50% of
Michael Mazerov of the Center on
Budget and Policy Priorities (CBPP) and Dr. William F. Fox of the UT Center on
Business and Economic Research have advocated “combined reporting” for years.
Charles McLure, Senior Fellow at the Hoover
Institution and Deputy Assistant Secretary of the Treasury during the Reagan
Administration said, “Failure to require unitary combination is an open
invitation to tax avoidance. (Or — to the extent
transfer prices are misstated — is it
tax evasion?) The advent of electronic
commerce exacerbates the potential problems of economic interdependence and
manipulation of transfer prices.” Charles E. McClure. “The Nuttiness of State and Local Taxes and the Nuttiness of Responses
Thereto”. State Tax Notes,
September 11, 2002, p. 851.
The Supreme Court has twice upheld the fairness and
constitutionality of “combined reporting”.
Q. What is “combined
reporting”? What loopholes will it close?
A. “Combined
reporting” is a comprehensive solution to plug most of the largest loopholes in
state corporate income tax systems. It nullifies the benefit of “PICs”, “nowhere income”, “transfer pricing”, “captive REITs”, “captive insurance companies” and “stashing”
income-earning assets in tax haven states.
See
Michael Mazerov. State Corporate Tax Shelters and the Need
for Combined Reporting. Center on Budget and
Policy Priorities. October 26, 2007.
For a detailed discussion of some of the major corporate tax shelters
and tax-avoidance strategies to which states that have not adopted “combined
reporting” are vulnerable, consult: http://www.cbpp.org/10-25-07sfp.pdf.
Q. Didn’t
A.
Instead of taking a piecemeal approach to closing corporate tax
loopholes, “combined reporting” goes to the core of the problem with a simple,
common sense solution. By requiring corporations to report all their related
subsidiaries as one business for tax purposes, “combined reporting” nullifies
all the loopholes that hinge on the ability to shift profits back and forth
among subsidiaries.
Q. How does
“combined reporting” work?
A. “Combined reporting” is the alternative to the current system,
“separate entity reporting” for corporate income tax calculation in TN. Most
multi-state businesses are organized as a “parent company” and multiple
subsidiaries with defined functions. “Separate entity reporting” states require
each separate entity (parent or subsidiary) that conducts business in the state
to file its own income tax return. This type of reporting leaves the door open
for businesses to transfer their income from one subsidiary in a state that
would tax it to another subsidiary in a state that would not tax it or tax it
at a lower rate.
“Combined reporting” states require businesses that operate in
their state to file one tax return combining the income and expenses of the
parent company and all its subsidiaries that operate in the same “unitary”
business. The income is then apportioned among the states according to a
formula that includes factors for payroll, real estate and sales.
Q. What is a
“unitary” business?
A. A unitary business is an integrated economic enterprise. One
example is a retail business with transportation, storage, real estate
management and marketing subsidiaries. If that company also owns a subsidiary
cattle ranch, with independent management and sales to outside buyers, the
subsidiary would not be part of the unitary business. If the subsidiary sold
its beef in the retail stores, however, it would be part of the unitary
business.
Q. Won’t clever
lawyers and accountants just devise new schemes to avoid state taxes?
A. They may, but “combined reporting” leaves less “wiggle room”
and smaller amounts of income available for tax sheltering. Other
loophole-closing approaches focus on one scheme at a time, and are subject to
more court challenges. Since “combined reporting” has been around so long, has
been upheld by the Supreme Court and is now supported by a model statute and
model regulations promulgated by the Multistate Tax
Commission, the lawyers and accountants will have to earn their fees.
Q. What companies
are most aggressive about sheltering their income from state taxes?
A. Corporations consider their tax returns confidential,
proprietary information. Thus, it is very difficult to get solid information
about their tax reduction strategies. The information that is available comes
from court cases between corporations and state departments of revenue trying
to enforce their laws and collect taxes they believe were due. State
Corporate Tax Shelters and the Need for Combined Reporting article cited
above lists 49 companies known to have used “PICs”.
Another study reviewed 252 corporations and compared the total
state and local income taxes corporations reported in their federal income tax
filings. The study listed state income tax rates for the years 2001 to 2003. It
found that 71 companies paid no state income taxes in at least one of those
years. The aggregate effective tax
rate paid over those three years was 2.6%, while the average rate, according to
state laws, was 6.8%.
Five of those 252 companies were headquartered in
See Robert
S. McIntyre and T.D. Coo Nguyen, State Corporate Income Taxes 2001-2003,
Citizens for Tax Justice. February 2005.
A detailed study of the low aggregate state corporate tax payments made
by many of the largest corporations in the
Q. Is it legal for
these companies to dodge so much of their tax liability?
A. Yes.
Q. How much revenue
would full “combined reporting” generate in
A. Because corporations’ tax returns are treated as
confidential, proprietary information, it is difficult to know with certainty
how much revenue would be generated by “combined reporting” in
The most detailed study on revenue generated through “combined
reporting”, prepared by the Pennsylvania Department of Revenue, received an award for best research by a state revenue
department from the Federation of Tax Administrators. That study found that
“combined reporting” would increase business income tax revenue by 24%. Based
on the following table, TFT estimates additional business income tax revenue in
the range of 12-25%.
Earlier studies produced the following results for other states:
|
Projected Increase in
Corporate Income Tax Revenue Due to Combined Reporting |
Dollar
increase (millions) |
Percent
Increase |
|
|
70 |
13.0 |
|
|
25 |
13.5 |
|
|
5 |
14.2 |
|
|
85 |
19.6 |
|
|
238 |
24.8 |
Source: