Tennessee Income Tax Prohibition, Amendment 3 (2014)

During the framing of the Constitution, our founding fathers quarreled over many issues. The issue of taxation was no different. The two main schools of thought, in regards to taxation, resided between Federalists and anti-Federalist parties. Federalists pushed for national authority over the power to tax, in addition to state proposals. Anti-Federalists objected to federal authority to tax, feeling the power would be illiberally abused. There were, however, issues in which the majority of the founding fathers agreed upon. Contrary to today’s popular beliefs, many of the founding fathers believed the poor should be taxed at a higher rate, in an attempt to motivate them to work thus propelling them out of their poverty.  Also conflicting with modern beliefs, they felt those who worked should be taxed less heavily so as to remunerate them for their endeavors:

“To take from one, because it is thought that his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers have not exercised equal industry and skill, is to violate arbitrarily the first principle of association.”

Benjamin Franklin argues:

 I am for doing good to the poor, but I differ in opinion of the means. — I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. In my youth I travelled much, and I observed in different countries, that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.[

These views are found in the founding fathers private papers as well as delineated throughout the Constitution.

To carry this further one must first understand the difference between external and internal taxation.  An external tax was a duty on any item which was being shipped to a specific colony or state. The tax would be originally paid by the shipper, but then imposed unto the item itself. This is known in present day terms as a tariff. An internal tax, however, was a tax which was imposed directly upon an item, such as a sales tax. The anti-Federalists made a clear distinction between these two types of taxes, which they argued the Federalists grouped into one category.

Richard Henry Lee, a renowned anti-Federalist, argued that external taxes were safe because their abuses were minimal and bounded. In regards to internal taxation, he felt the national government would gradually shift tax policy in order to favor their personal prosperity.

He explained:

“…the power would be improperly lodged in congress, and that it might be abused by imprudent and designing men.”  Lee also questioned the authority of those in power, and made arguments for the power to be left with the people.  “Why give the power to the few, who, when possessed of it, may have address enough to prevent the increase of representation? Why not keep the power, and, when necessary, amend the constitution”

The Federalists tried the best they could to compromise on the issues being voiced at the time. Alexander Hamilton directly addressed the issue in the New York Packet writing:

“There is a simple point of view in which this [tax dispute] may be placed that must be altogether satisfactory. The national legislature can make use of the system of each state within that state. The method of laying and collecting taxes in each State can, in all its parts, be adopted and employed by the federal government.”

Hamilton in his papers writes in favor of a concurrent tax system, in which both the federal and the state governments maintain the authority to tax, except in the case of imports and exports which are exclusively restricted from state’s authority. So where does this take us…. well the power to tax or not to tax falls into the hands of the legislatures and that the revenue they collect be used for their respective governments.

Generally this will tell you that under some legal microscopes the state of Tennessee could, if so inclined, enact an income tax.

In my humble opinion, on this issue I with the whole of my heart must agree with the Anti Federalist Brutus:

Neither the general government nor the state governments ought to be vested with all the powers proper to be exercised for promoting the ends of government. The powers are divided between them-certain ends are to be attained by the one, and certain ends by the other; and these, taken together, include all the ends of good government. This being the case, the conclusion follows, that each should be furnished with the means, to attain the ends, to which they are designed.

The following information was obtained from ballotpedia.org and reflects the summation of both sides. Both Travis Brown and John G. Stewart gave excellent arguments as to what is right with amendment or wrong with this amendment. However those arguments have been around a long time.

The Tennessee Income Tax Prohibition, Amendment 3 is on the November 4, 2014 ballot in the state of Tennessee as a legislatively-referred constitutional amendment. The measure, upon voter approval, would prohibit the legislature from levying, authorizing or permitting any state or local tax upon payroll or earned personal income.

The amendment would not apply to any tax in effect on January 1, 2011. The only income tax in effect on that date was on certain stock dividend and interest income. Therefore, the amendment does not prohibit a personal income tax on certain stock dividend and interest income.

The amendment was sponsored in the Tennessee Legislature by State Senator Brian Kelsey (R-31) and State Representative Glen Casada (R-63) as Senate Joint Resolution 1.

In Tennessee, a legislatively-referred constitutional amendment must earn a majority of those voting on the amendment and “a majority of all the citizens of the state voting for governor.”

Text of measure

Ballot title

The official ballot text reads as follows:

Shall Article II, Section 28 of the Constitution of Tennessee be amended by adding the following sentence at the end of the final substantive paragraph within the section:
Notwithstanding the authority to tax privileges or any other authority set forth in this Constitution, the Legislature shall not levy, authorize or otherwise permit any state or local tax upon payroll or earned personal income or any state or local tax measured by payroll or earned personal income; however, nothing contained herein shall be construed as prohibiting any tax in effect on January 1, 2011, or adjustment of the rate of such tax.

□ Yes
□ No

Constitutional changes

The proposed amendment adds a paragraph to the end of Section 28 of Article II of the Constitution of Tennessee:

Notwithstanding the authority to tax privileges or any other authority set forth in this Constitution, the Legislature shall not levy, authorize or otherwise permit any state or local tax upon payroll or earned personal income or any state or local tax measured by payroll or earned personal income; however, nothing contained herein shall be construed as prohibiting any tax in effect on January 1, 2011, or adjustment of the rate of such tax.

Fiscal note

The fiscal note developed by the Tennessee General Assembly Fiscal Review Committee reads as follows:


Increase Local Expenditures – Up to $10,000/FY14-15*

  • The proposed constitutional amendment received the required constitutional majority vote with passage of Senate Joint Resolution 221 by the 107th General Assembly. The required publication was made on May 6, 2012.
  • Following first passage by two successive General Assemblies, and pursuant to Article XI, Section 3 of the Tennessee Constitution, it shall be the duty of the General Assembly to submit such proposed amendment to the people at the next general election in which a Governor is to be chosen.
  • Tenn. Code Ann. § 2-5-211(b) requires the county election commission to publish a sample ballot in a newspaper of general circulation or mail sample ballots to registered voters at least five days prior to early voting.
  • The requirement to add this constitutional amendment to the 2014 general election ballot will increase the size of the sample ballot.
  • Given the size of the sample ballot will increase, and because publishing costs are generally based on the number of words published or the number of document pages printed, local government expenditures are expected to increase.
  • Based on information provided by the Secretary of State, the total statewide increase in local government expenditures is reasonably estimated as an amount up to $10,000 in FY14-15.


There is no general state income tax in Tennessee. There is, however, an income tax on dividends from stocks and interest on certain bonds. This income tax is known as the “Hall Income Tax.” The tax rate is 6%. Constitutionally, Tennessee could enact an income tax on wages, salaries and so on. Amendment 3 would amend the constitution to prohibit the possibility of an income tax in the future.


TN Vote Yes on 3 2014.jpg

The campaign in support of the amendment is being led by Yes on 3 Tennessee

The measure was supported in the legislature by Sen. Brian Kelsey (R-31).



  • Gov. Bill Haslam (R)
  • US Sen. Lamar Alexander (R)


The following state senators voted to place the measure on the ballot:

Note: A yes vote on the measure merely referred the question to voters and did not necessarily mean these legislators approved of the stipulations laid out in Amendment 3.

  • Steve Southerland (R-1)
  • Doug Overbey (R-2)
  • Rusty Crowe (R-3)
  • Ron Ramsey (R-4)
  • Randy McNally (R-5)
  • Becky Duncan Massey (R-6)
  • Stacey Campfield (R-7)
  • Frank Niceley (R-8)
  • Mike Bell (R-9)
  • Todd Gardenhire (R-10)
  • Bo Watson (R-11)
  • Ken Yager (R-12)
  • Bill Ketron (R-13)
  • Jim Tracy (R-14)
  • Janice Bowling (R-16)
  • Mae Beavers (R-17)
  • Ferrell Haile (R-18)
  • Steven Dickerson (R-20)
  • Mark Green (R-22)
  • Jack Johnson (R-23)
  • John Stevens (R-24)
  • Jim Summerville (R-25)
  • Dolores Gresham (R-26)
  • Lowe Finney (R-27)
  • Joey Hensley (D-28)
  • Ophelia Ford (D-29)
  • Jim Kyle (D-30)
  • Brian Kelsey (R-31)
  • Mark Norris (R-32)


The following state representatives voted to place the measure on the ballot:

Note: A yes vote on the measure merely referred the question to voters and did not necessarily mean these legislators approved of the stipulations laid out in Amendment 3.

  • Jon Lundberg (R-1)
  • Tony Shipley (R-2)
  • Timothy Hill (R-3)
  • Kent Williams (CCR-4)
  • David Hawk (R-5)
  • James Van Huss (R-6)
  • Matthew Hill (R-7)
  • Art Swann (R-8)
  • Mike Harrison (R-9)
  • Tilman Goins (R-10)
  • Jeremy Faison (R-11)
  • Dale Carr (R-12)
  • Gloria Johnson (D-13)
  • Ryan Haynes (R-14)
  • Joe Armstrong (D-15)
  • Bill Dunn (R-16)
  • Andrew E. Farmer (R-17)
  • Steve Hall (R-18)
  • Harry Brooks (R-19)
  • Robert Ramsey (R-20)
  • Jimmy Matlock (R-21)
  • Eric Watson (R-22)
  • John W. Forgety (R-23)
  • Kevin Brooks (R-24)
  • Cameron Sexton (R-25)
  • Gerald McCormick (R-26)
  • Richard Floyd (R-27)
  • JoAnne Favors (D-28)
  • Mike Carter (R-29)
  • Vince Dean (R-30)
  • Ron Travis (R-31)
  • Kent Calfee (R-32)
  • John Ragan (R-33)
  • Richard B. Womick (R-34)
  • Dennis Roach (R-35)
  • Dennis Powers (R-36)
  • Dawn White (R-37)
  • Kelly Keisling (R-38)
  • David Alexander (R-39)
  • Terri Lynn Weaver (R-40)
  • John Windle (D-41)
  • Ryan Williams (R-42)
  • William G. Lamberth (R-44)
  • Courtney Rogers (R-45)
  • Mark Pody (R-46)
  • Judd Matheny (R-47)
  • Joe Carr (R-48)
  • Mike Sparks (R-49)
  • Bo Mitchell (D-50)
  • Michael Turner (D-51)
  • Jason Powell (D-53)
  • Gary Odom (D-55)
  • Beth Harwell (R-56)
  • Susan Lynn (R-57)
  • Harold M. Love (D-58)
  • Sherry Jones (D-59)
  • Darren Jernigan (D-60)
  • Charles Sargent, Jr. (R-61)
  • Pat Marsh (R-62)
  • Glen Casada (R-63)
  • Sheila Butt (R-64)
  • Jeremy Durham (R-65)
  • Joshua Evans (R-66)
  • Joe Pitts (D-67)
  • Curtis Johnson (R-68)
  • David Shepard (D-69)
  • Barry Doss (R-70)
  • Vance Dennis (R-71)
  • Steve McDaniel (R-72)
  • Jimmy Eldridge (R-73)
  • John Tidwell (D-74)
  • Tim Wirgau (R-75)
  • Andrew H. Holt (R-76)
  • Bill Sanderson (R-77)
  • Mary Littleton (R-78)
  • Curtis Halford (R-79)
  • Debra Moody (R-81)
  • Craig Fitzhugh (D-82)
  • Mark White (R-83)
  • Larry Miller (D-88)
  • Roger Kane (R-89)
  • John Deberry, Jr. (D-90)
  • Billy Spivey (R-92)
  • Barrett Rich (R-94)
  • Curry Todd (R-95)
  • Stephen McManus (R-96)
  • Jim Coley (R-97)
  • Ron Lollar (R-99)

Former officials

The following former officials voted to place the amendment on the ballot:

  • Former Rep. Charles Curtiss (D-43)


  • Beacon Center of Tennessee[12]


Travis H. Brown, a columnist for Forbes, called the amendment “absolutely critical.” The following is an excerpt from his article on Amendment 3:

… By prohibiting the future implementation of an income tax, Tennessee is lighting a bright neon “Open” sign that will attract families and businesses alike…Anyone with an interest in data should quickly see why Tennessee must set its no-income-tax status in stone. As my Wealth of States coauthor, the esteemed economist Dr. Art Laffer, often says, “Taxation doesn’t generate revenue, it moves people,” [sic] Between 1992 and 2011, the state gained $10.55 billion in net adjusted gross income, with the lion’s share coming in from such high-tax states as California, Michigan, and Illinois. The nonpartisan Tax Foundation ranks Tennessee as 15th-best in the nation on its 2014 State Business Tax Climate Index. And it’s not just small to mid-sized businesses that are taking note of Tennessee’s sunny tax climate; global players like Amazon have opened giant warehouses in the state.

Tennessee is a significant player in the Heartland tax revolution, creating real opportunities for working families while Washington, D.C., sputters and stagnates on tax reform. Heartland states understand the need to compete, both on a national and international stage. A yes vote on Amendment 3 sends the clearest of messages: In order to stay competitive, Tennessee must eliminate the possibility of an income tax, today and tomorrow…

—Travis H. Brown

Other arguments in support of the amendment include:

  • Sen. Brian Kelsey (R-31) argued, “This is going to help us bring in jobs to Tennessee. We can say not only do we not have an income tax, but we’ll never have an income tax.”

Campaign contributions

Total campaign cash Campaign Finance Ballotpedia.png
as of October 27, 2014
Category:Ballot measure endorsements Support: $217,457
Circle thumbs down.png Opposition: $23,064

As of June 30, 2014, Yes on 3 PAC has received $16,000 in contributions.[15]

Referendum committee:

PAC Amount raised Amount spent
Yes on 3 PAC $217,457 $13,650
Total $217,457 $13,650

Top contributors:

Donor Amount
Pelopidas, LLC $192,711
Joseph Scarlett $5,000
Lee Beaman $5,000
John M. Skvarla $3,000
VoteKelsey.com $2,000


TN Vote No on 3 2014.png

The campaign in opposition to the amendment is being led by Vote No on 3.




The following state senators voted against placing the amendment on the ballot:

  • Charlotte Burks (D-15)
  • Thelma Harper (D-19)
  • Douglas Henry (D-21)
  • Reginald Tate (D-33)


The following state representatives voted against placing the amendment on the ballot:

  • Mike Stewart (D-52)
  • Johnny Shaw (D-80)
  • Joe Towns, Jr. (D-84)
  • Johnnie Turner (D-85)
  • Barbara Cooper (D-86)
  • Karen Camper (D-87)
  • Goffrey A. Hardaway (D-93)
  • Antonio Parkinson (D-98)

Former officials

  • Former Sen. Beverly Marrero (D-30)


  • Tennesseans for Fair Taxation


John G. Stewart, former assistant general manager and vice president of the Tennessee Valley Authority, argued the amendment would actually increase taxes for the “average working Tennessean.” He elaborated:

No, Amendment 3 is related to all the other taxes that are permitted by the amendment and that surely would be raised in future years, such as what already is the nation’s highest sales tax, the tax on groceries, business taxes, fees and even the possibility of a statewide property tax. That’s what Amendment 3 is really all about.But to divert voters from this shocking realization, the advocates have concocted all sorts of other arguments that are confusing and wrong. One of their favorites is that an income tax will drive away businesses from locating in Tennessee or from expanding existing businesses. We are told that “businesses love to locate in Tennessee because Tennessee has no income tax.” Plus, “states that don’t have an income tax are doing much better economically than states that do.” How many times have you heard these claims?

Well, a personal observation seems timely. For five years, I was in charge of TVA’s economic and community development program. We met with dozens and dozens of prospective employers during these years. I cannot recall a single instance — not one — when the prospective employer showed any interest in the issue of income taxes in Tennessee. But they all were vitally interested in the availability of trained, skilled and experienced workers and in the state’s capacity to train workers — at four-year colleges, community colleges and technical institutes. The absence of skilled workers, not the presence or lack of a state income tax, often was the deal breaker.

Economic analysis supports what I encountered personally. The Center on Budget and Policy Priorities has determined that differences in tax levels among states have little or no effect on whether and where people and businesses move. Movement for most people is for employment opportunities, less expensive housing and, for many retirees, a warmer, mostly snow-free climate. If deep tax cuts result in significant deterioration in education, public safety, parks, roads and other critical services and infrastructure, these states will be less, not more, desirable places for businesses and individuals…

There’s more. Whether looking at income levels, unemployment rates or economic output per person, states with “high rate” income taxes have economies that equal or surpass those in states lacking an income tax, as reported by the Institute of Taxation and Economic Policy.

Yes, pity the poor voter trying to make sense out of all this. But one point should be clear to everyone: Permanently barring even the consideration of an income tax, regardless of circumstances, years in the future will force the increase of other taxes not banned by Amendment 3.

One other thing is certain: The average working Tennessean will, once again, be forced to pick up the largest portion of this enhanced tax burden. Count on it.

—John G. Stewart

Other arguments against the amendment include:

  • Tennesseans for Fair Taxation’s Jim Von Bramer called the amendment “irresponsible.” He argued, “Permanently blocking an income tax lets the wealthiest Tennesseans walk away from paying a fair share of state and local taxes forever while the rest of us pay much more of our income on food taxes and the basic necessities we buy from our local retailers. Our state budget gap will likely only grow as the federal budget shrinks. We are headed into a dark place, and now the state Senate says we should throw away our flashlight.”
  • Dr. John Gnuschke, director of the University of Memphis Bureau of Business and Economic Research, said, “It will limit future options for state legislative leaders and that is not a good idea in a state that struggles to maintain a balanced budget and still provide high quality public services. The passage would increase the burden on sales and property taxes, the principal sources of revenue for state and local areas. States that have income taxes have revenues that grow as the economy grows and allow government to respond to the demand for public services. Practical limitations on property and sales tax rates are already being faced in many areas of the state.”

Campaign contributions

As of October 27, 2014, Citizens for Fiscal Sanity has received $23,064 in contributions. Citizens for Fiscal Sanity is Vote No on 3’s referendum campaign committee.

Referendum committee info:

PAC Amount raised Amount spent
Citizens for Fiscal Sanity $23,064 $8,615
Total $1,930 $8,615

Path to the ballot

See also: Amending the Tennessee Constitution

The proposed measure was filed in the Tennessee Legislature on January 13, 2011 by Sen. Brian Kelsey (R-31).

The Tennessee General Assembly was required to approve the amendment in two successive sessions. In the first session, the measure required a simple majority for approval. In the second session, the proposed amendment needed to earn a two-thirds vote for approval. SJR 1 was approved by the Tennessee Senate for a second time on February 14, 2013. SJR 1 was approved by the Tennessee House of Representatives for a second time on April 8, 2013.

Senate vote

February 14, 2013 Senate vote

Tennessee SJR 1 Senate Vote
Result Votes Percentage
Approveda Yes 27 87.10%
No 4 12.90%

House vote

April 8, 2013 House vote

Tennessee SJR 1 House Vote
Result Votes Percentage
Approveda Yes 80 90.91%
No 8 9.09%
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