A Constitutional Amendment on the November Ballot would bar Tennessee from ever enacting state or local income tax.

Amendment 3: “No State Income Tax Amendment” – Tennessee Amendment 3 is a legislatively referred ballot measure that would prohibit the state government and local governments from instituting a state or local income tax. The ballot measure reads: “ 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.”

Currently, Tennessee is one of nine states without a state individual income tax – though the state does have what is called “The Hall Tax” which is a 6% tax on dividends. Despite a 1932 Tennessee Supreme Court ruling that struck down a state income tax, tax and spend proponents have argued that there are now legal grounds to institute an income tax in Tennessee. The passage of Amendment 3 would enshrine Tennessee’s position as a no-income tax state in the state constitution and require a much greater threshold to enact a state income tax.

State Senator Brian Kelsey, who sponsored the referendum, argues, “If this amendment passes, Tennessee will never face an income tax battle again… Not having a state income tax has already brought jobs to Tennessee, and clarifying this prohibition will help Tennessee become the number one state in the Southeast for high quality jobs.”  Writing in Forbes, Travis H. Brown of How Money Walks notes: “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.”

“Tennessee and the other eight states without an income tax have outperformed the United States average in the categories of population growth, economic growth, and employment,” said Grover Norquist, president of Americans for Tax Reform. “By approving Amendment 3 this November,” added Norquist, “Tennessee voters can ensure that their state maintains this competitive advantage over other states, regardless of the partisan and ideological makeup of future state legislatures.”