Seasoned lawmaker gives insight into state revenue

By Bob Robinson
Star Staff

   Lieutenant Governor and Speaker of the Senate John Wilder, D-Somerville, believes State Income Tax legislation is dead in the next legislative session, which convenes at noon, Tuesday, Jan. 8, in Nashville.
   In an exclusive interview with the Elizabethton Star last week, Gov. Wilder said a State Income Tax is also unconstitutional.
   "In 1870, people voted for an income tax but it was to tax investment income, not to tax earnings income.
   "There are not enough votes to pass a State Income Tax in the Senate. Maybe there were 16 votes at one time. There are not 16 votes now.
   "Tennessee's Attorney General believes the courts will uphold the State Constitution.
   "Our problem is the non-deductibility of taxes. Uncle Sam taxes sales tax: 80 percent of people file the standard deduction, 20 percent and business pay 60 percent of the tax, which is approximately $1 billion.
   "Uncle Sam taxes and won't let the State of Tennessee tax Internet sales, which total $380 million annually. When it goes to $500 million, Tennessee will lose $5 million in sales and jobs."
   Gov. Wilder said he wanted to file suit against the Federal Government on this issue but was advised "it wouldn't do any good."
   "My top priority last year was to get the law changed in Congress. Rep. Bob Clement, D-Nashville, supported me but nobody else did. Non-deductibility of taxes is what has gotten us in the shape we are in.
   "The other financial problem was caused when funds were taken away from education for TennCare. In 1971, when I became speaker, 57 cents of every dollar went to education, 25 cents went to roads and one cent to corrections. I am talking about the total budget.
   "Today, 45 cents goes to health care, TennCare and mental retardation, 27 cents to education and 10 cents to roads.
   "We took money away from education and put it in health care. At the time, I made a mistake by not telling Gov. Ned McWherter he should fund TennCare with a tax and not put it in place by Executive Order. I didn't do that.
   "TennCare has two MCOs (managed care organizations) that know what they are doing, manage well, and the rest of them don't.
   "TennCare doesn't pay the cost. They pay 70 percent of cost -- $1 billion plus is passed on to consumers. That's the reason the state's in the squeeze we are in."
   Gov. Wilder said the Constitution needs to be amended because property tax, alone, is not a dependable source of revenue.
   "The State Constitution needs to be rewritten to include income and earnings. It can be adjusted by a change in the tax law that may get a deduction.
   "Uncle Sam is our problem."
   Do you have a prediction on the Tennessee economy improving anytime soon?
   "The economy is soft. I don't know when it will turn around. I'm in agriculture. I'm into cotton. We grow cotton. This year we ginned 60,000 bales, which is good. The cotton farmer is getting 38 cents a pound but it costs nearly 60 cents a pound to produce it if he is good. He is losing his farm.
   "Uncle Sam will pay you something for nothing but not something for something. Uncle Sam, under President Roosevelt, encouraged farmers not to produce because there was too much supply.
   "Now we have the environmentalists influencing the outcome. There are 30 million acres where farmers are paid $65 per acre not to farm. It goes to 40 million acres in 2003. Uncle Sam won't pay one penny on it for subsidies; 85 percent of all subsidies in the world are in Europe.
   "Uncle Sam won't pay you something for something. He will only pay you something for nothing.
   "The $170 billion U.S. trade deficit is going to $300 billion. When it does, Uncle Sam will not be able to pay the national debt," Gov. Wilder said.