by Justin Owen

General Motors is now notorious for reaching deep into the pockets of taxpayers to bail itself out of a bad situation. In 2008, under the Troubled Asset Relief Program, or TARP, President Bush doled out the first round of what eventually became $50 billion to the Detroit automaker. With that, the United States government became a majority owner in the company.

This did not sit well with most taxpayers, who cried foul and rightfully so. Soon thereafter GM became known by the more appropriate moniker of “Government Motors.” Fearing a consumer backlash against it for this historic bailout, GM attempted to distance itself from the Washington scene. But taxpayers weren’t fully off the hook.

Rather than retool its business model to become competitive in the free enterprise system, GM turned to another, smaller government teat. Or several of them, actually. Since its grand TARP bailout, the company has received another $1.7 billion in taxpayer-funded grants and tax abatements, not from the federal government, but from states across the country.

Some might call this coincidence, but GM freely admits it is outright strategy. In a recent interview with TennesseeWatchog.org, a project of my organization, a company spokesman stated matter-of-factly that, “We are increasing our activity with the states obviously, in the communities in which we operate.”

How right he is. Not long after the TARP bailout, GM began ramping up its lobbying arm in several states—including Tennessee, Maryland, Indiana, and Texas. Over the next few years, public filings reveal the company doubled its lobbying expenditures in Tennessee, increased them by 60 percent in Indiana, and by 78 percent in Texas, while also hiring in-state lobbyists in each of the states to give it the proverbial boots on the ground.

The payoff was handsome. State officials in Tennessee just awarded GM more than $1.5 million in grants, part of which went to reopen a plant in Spring Hill, Tennessee. This comes on the heels of a $17 million taxpayer handout in 2009, after which the company immediately packed up and shipped the jobs it had promised Tennesseans back to Michigan. With this track record, there is no certainty it won’t happen again if another state forks over more money to lure them away.

GM’s increased lobbying efforts also helped the company obtain a $3 million grant through the Maryland Economic Development Assistance Fund and a $1.5 million grant from the Maryland Department of Labor, Licensing and Regulation. In 2009, local Indiana officials announced a $2 million incentive package for the GM assembly plant in Fort Wayne. And in Texas, the company recently applied for refunds on state sales and use tax payments through a state incentive program. For GM, the savings would amount to $3.75 million.

Apparently, turning taxpayers on their heads and shaking every penny from their pockets is a profitable corporate strategy for a quasi-public car company. As of last summer, GM sat on roughly $40 billion in reserves. Yet the ribbon-cutting ceremonies with state officials across the country continue like clockwork, with taxpayers footing a lofty bill.

All the while, GM touts that it has paid back the billions of dollars that taxpayers used to prop it up in 2008. That claim itself is misleading, but even the amount it has returned to the federal government has essentially been funded—in part—by those same taxpayers via state governments. This adds a whole new meaning to the phrase “in one hand and out the other.” One thing is for sure, four years after TARP, GM has proven that it can still take taxpayers for a ride.

Justin Owen is president & CEO of the Beacon Center of Tennessee, the state’s free market think tank. 

Related posts:

1. Taxpayers foot new West TN port
2. 2011 Pork Report uncovers $371 million in government waste
3. Corporate welfare hits a snag in Nashville

by Justin Owen

For the past six years, the Beacon Center of Tennessee (founded as the Tennessee Center for Policy Research) has ranked the state’s 50 most populous cities according to their business climate. The categories we choose reflect cities’ commitment to creating a business-friendly atmosphere based on strong economic vitality and community allure, and free of stifling taxes and restrictive regulatory burdens.

Cities with low tax burdens, less regulation, quality education systems and low crime rates fare better at attracting and retaining business than those with high taxes, burdensome red tape, poor schools and high crime. Since people “vote with their feet,” these factors often lead to population and job growth, which more directly signal a city’s commitment to economic strength.

Each year, cities are ranked by data compiled and placed into three categories: Economic Vitality, Business Tax Burden and Community Allure. These categories included factors such as job and population growth, tax burdens, household income, cost of living, crime rates and education statistics, all important measures for determining how friendly a city is to business growth.

After culling data from various reputable sources, including the U.S. Census Bureau, the FBI and the Tennessee Department of Education, our rankings indicate that the Town of Farragut is Tennessee’s Most Business-Friendly City.

The Knox County city has consistently scored high in the rankings due primarily to its low tax burden — it lacks a city property tax and is the only top 50 city that chooses to impose no gross receipts tax on businesses. It also posted strong job performance, a low crime rate and higher than average median income levels, leading it to a first place finish in 2011.

Four Middle Tennessee cities round out the top five. Brentwood, Franklin, Mt. Juliet and Spring Hill follow Farragut’s lead with low tax rates and positive job growth over the past year.

On the flipside, Memphis finished dead last for the second consecutive year. The Bluff City has consistently failed to address its education woes and has an abhorrently high crime rate. It also imposes a property tax that is nearly 16 percent higher than that of any other city in the state.

Other cities ranking toward the bottom posted similarly high tax rates, low income for residents, and low education results. Taken together, these factors can drive away businesses seeking to expand or relocate.

Cities that want to attract new business development while also nourishing existing enterprise should follow the lead of Farragut by limiting their tax burdens, addressing crime, and maintaining a quality education system. This will attract new residents and thereby business growth regardless of the overall economic outlook.

As Farragut has proven, a city can be business-friendly even during periods of economic malaise. For that reason, the Beacon Center is proud to bestow the town with the honor of being Tennessee’s Most Business-Friendly City in 2011.

Related posts:

1. How Business-Friendly are Tennessee’s Cities?
2. Business-Friendly Cities Recap
3. Biz-Friendly Cities report captures attention

by Justin Owen

Nashville is a thriving Southern city. Tourists and residents enjoy the music, entertainment and other amenities the city offers. One group, however, doesn’t fare so well. Home-based business owners, street vendors and food-truck operators get tangled up in a web of restrictive laws merely trying to earn a living.

Take Pat Raynor, for example. Pat is a widow who had planned to establish a small hair salon inside her remodeled garage. After meeting requirements to start her small business, Pat hit a brick wall. Nashville officials told her that she couldn’t open her salon without breaking the law. A Metro ordinance prohibits home-based businesses from serving any customers at home. The ordinance is one of the strictest in the nation.

Street vendors face their own barriers to success. To become a street vendor in Nashville, one must jump through a myriad of hoops, and that’s only before facing city officials who arbitrarily enforce vague and confusing laws.

One of these unlucky entrepreneurs is Tim Smith, who earns his living selling sunglasses at major events such as the annual CMA Music Festival. Tim takes painstaking efforts to comply with all the laws imposed upon him. Yet, during the 2009 festival, a codes enforcement officer arbitrarily shut down his stand.

The reason? According to Tim, the officer had shut down other stands in the area, and he couldn’t justify letting Tim continue to operate there. Despite breaking no laws, Tim lost $10,000 in much-needed income.

Until now, food-truck vendors were fairly free from the onerous rules imposed upon entrepreneurs like Pat and Tim. This could be why the industry has boomed, with food trucks cropping up all over Nashville.

This has caught the attention of bureaucrats in the Metro Traffic and Parking Commission, who now seek to regulate these mobile entrepreneurs. Interestingly, the biggest backers of food-truck regulations are the brick-and-mortar businesses that compete with these mobile vendors for customers.

This is all too often the case. As if entrepreneurs such as street vendors and home-based business owners don’t have enough to overcome, their would-be competitors team up with overzealous bureaucrats to drive them out of business.

Laws such as those for nuisances and zoning already keep the peace and prevent harm to neighbors and customers alike without putting small-scale entrepreneurs out of work. Additional and unnecessary regulations like those imposed upon Nashville’s home-based businesses, street vendors and food-truck operators should be eliminated unless they directly protect the health and safety of citizens.

These entrepreneurs have a right to economic liberty, to earn an honest living free from arbitrary and needless government regulations. The tough economy is already making life difficult for entrepreneurs like Pat, Tim and thousands of others like them. Nashville government should seek to help, not harm, their chances of success.

Justin Owen is president and CEO of the Beacon Center of Tennessee (formerly the Tennessee Center for Policy Research) and co-author of “A Burdensome Tune,” a report analyzing Nashville’s regulations on local entrepreneurs; www.tennesseepolicy.org.

Related posts:

1. Nashville regulations play “A Burdensome Tune” for entrepreneurs
2. TCPR’s new report featured on Channel 4 News
3. Farragut earned business-friendly ranking

The legal battle between Boeing and the National Labor Relations Board could impact Tennessee’s ability to create jobs, notes the Tennessee Center for Policy Research’s Josh Fields. This article originally appeared in the Tennessean.

by Josh Fields

The clash between labor unions and businesses is a deep-rooted skirmish, creating fault lines that have helped to shape America’s political landscape.

The latest quarrel is that between the National Labor Relations Board and Boeing Corp., and though it is taking place outside of Tennessee, the implications run deep beneath its bedrock.

At stake in the battle is a $1 billion factory in South Carolina that Boeing hopes will be housing a production line of their new 787 Dreamliner passenger jet. The NLRB claims that Boeing is building the facility in South Carolina to punish the unions in Washington state for past strikes and high wages. The advantage that South Carolina has in luring companies like Boeing is their right-to-work status.

Under right-to-work laws, you cannot be forced to become a member of, or pay dues to, a union. This incentivizes, as has been seen over the past 40 years, businesses to move or expand some production lines to states with these policies. Tennessee is one of the beneficiaries of this status. From major corporations to small operations, Tennessee has experienced a steady growth in its manufacturing base and economic output despite economic downturns and outsourcing nationwide.

It is no accident that states with business-friendly climates attract business from other regions and other nations. Yet, the NLRB attack on Boeing indicates a disturbing trend. As the U.S. economy struggles to find its stride, the push from labor unions on existing facilities grows. Lack of job creation in those regions has put stress on union leaders to keep their grasp on expansion.

Pressure also mounts on politicians dependent on union donations to keep them in power. It is important to note that Boeing isn’t cutting jobs but putting an additional plant in South Carolina.

The implications here are dizzying. Given Tennessee’s business-friendly reputation, are the policies that help maintain its business prestige all for naught? Elected leaders on both sides of the aisle have staked their careers in maintaining and building an environment that sets Tennessee apart from other states. Moreover, Tennessee workers have benefited greatly from the economic freedom and helped to build the solid reputation of our labor force.

Tennesseans should be concerned that unions now seek to prevent right-to-work states from scooping up those jobs. The NLRB appears to be doing its job to protect unions, but in reality it is merely protecting a monopoly at the expense of job growth and competition among the states to offer better economic climates.

I believe unions in some cases should exist, but their abuse of power in this instance threatens to undermine many state-based policies that have led to substantial economic growth and job creation.

This is not just a South Carolina problem. It could very well shake the foundation upon which Tennessee’s pro-growth economic foundation rests.

Josh Fields is a research associate at the Tennessee Center for Policy Research, the state’s free-market think tank.

Related posts:

1. Government Should Do Less to Make Tennessee More Business-Friendly
2. Less is More
3. Less is More

by Allyn Milojevich

Nearly 1,500 metric tons of high-level nuclear waste are being held in temporary storage pools at nuclear power plants across Tennessee.

According to federal law, Nevada’s Yucca Mountain is the nation’s sole long-term, high-level nuclear waste repository. Long-term nuclear waste storage at Yucca Mountain is financed from taxes on electricity generated by nuclear power plants. Tennessee ratepayers alone have contributed more than $505 million to this fund.

Despite the investment made by utility customers across the nation, President Barack Obama plans to abandon the Yucca Mountain project. Due to the complexity of the process involved, the Government Accountability Office reports that it could take as many as 20 years and billions of dollars to locate another suitable storage site, and even more to fund the site design, licensing process and construction.

The House Appropriations Committee has attempted to revitalize the Yucca Mountain project by introducing an energy-spending bill that contains $35 million for Yucca Mountain development. After 29 years of setbacks and bureaucratic stalling, perhaps we ought to shift away from the belief that the federal government is the only way to provide long-term waste storage in a safe, effective manner.

I propose that we sell the Yucca Mountain waste repository to a private corporation. In exchange, this company would be required to accept all of the nuclear waste now stored throughout the country and comply with standards established by the Environmental Protection Agency and the Nuclear Regulatory Agency.

This company would have an incentive to quickly establish a repository. The sooner it deposits the current waste, the sooner it can develop a business model for the newly generated waste. It would also have a strong incentive to safely establish a repository, as denial of a license would threaten its ability to stay in business. Not only does this solution remove all high-level nuclear waste from our states, but the money that Tennesseans (and the other states’ residents) have already invested in the Nuclear Waste Fund could be returned to them in the form of a refund.

According to the EPA, nuclear energy produces no carbon dioxide, sulfur dioxide or nitrogen oxides (though fossil fuel use is associated with uranium mining and transportation). Nuclear power is highly efficient, especially when compared to coal, wind or solar power.

To meet our projected electricity demands, policymakers must seriously consider increases in the number of nuclear power plants. Tennessee currently obtains 33.4 percent of its power from nuclear sources. In comparison, France generates nearly 80 percent of its electricity by nuclear reactors, and there is no reason that Tennessee should not aspire to such high levels.

However, nuclear waste is a side effect of this technology that must be addressed. The development of a safe and effective waste repository has already begun in Nevada. The time, money and energy used to develop this repository should not have been in vain. We must not allow nuclear waste to sit idle in backyards throughout the country.

Allyn K. Milojevich is a political science graduate student at the University of Tennessee and a research fellow with the Tennessee Center for Policy Research.

Related posts:

1. Closing Yucca Mountain a waste
2. Sell Yucca Mountain?
3. The Oil-Tight Market: Wishing Away a Fossil Fuel “Energy Policy”

by Ben Cunningham & Justin Owen

In the run-up to his reelection campaign, Nashville Mayor Karl Dean promised voters that he would not raise their property taxes. Nashvillians could breathe a collective sigh of relief for avoiding a tax increase during an economic recession…or so they thought.

Enter the “Bat Poet,” an apparently beloved yet likely trademark infringing knock-off of Batman, whose show airs on Nashville public access television in grainy off-color. In many airings, scantily clad burlesque models make cameos on the show. If only such quality programming were in HD. Mayor Dean to the rescue, casting Metro taxpayers as the villains.

Mayor Dean has quietly laid the groundwork for a whopping 1,200 percent increase in a tax Comcast customers pay to provide this public access television throughout Nashville. In exchange for a nickel tacked onto their Comcast bills, Nashville residents currently receive televised access to local government proceedings, Metro events, and other local shows.

Dean wants to jack up the monthly fee from five cents to 65 cents. While 65 cents a month doesn’t sound like a big deal, taxpayers are already being nickel and dimed into oblivion. A dollar here, a dollar there, and pretty soon we’re talking real money.

The mayor wants to use this additional tax revenue to equip all Metro buildings with television services. The plan also includes the purchase of a mobile production unit and receiving station to televise events throughout the city. And best of all, the mayor wants to bring taxpayers Metro Council meetings and other televised proceedings, including “Bat Poet,” in high-definition.

Not only does this plan represent a colossal waste of taxpayer money, it unfairly punishes certain taxpayers while others get the windfall. First, the tax only applies to Comcast customers. Those who opt for Comcast’s competitors, such as AT&T or DirectTV, get the same service without the cost. Surely Comcast customers are not the only spectators of “Bat Poet,” and therefore should not bear the full cost of airing the absurd melodrama.

Further, taxing all Comcast customers for the high-definition upgrade poses a similar problem. It is estimated that only 40 percent of Comcast customers pay for high-definition access. Thus, a significant majority of customers will fork over extra dough for a service they cannot even take advantage of without incurring even more costs by purchasing HD.

As the spokesmen for Tennessee’s leading government watchdog organizations, we commend the mayor and the city for their partnership with Comcast to bring more open, transparent government to Nashville residents, batty shows notwithstanding. However, this 1,200 percent tax hike will do nothing to make Metro government more transparent. It will merely put less money in taxpayers’ pockets and sharper images on their TV screens. If Mayor Dean wants superhero status, he needs to drop his call for this unfair, unnecessary tax hike.

Ben Cunningham is the spokesman for Tennessee Tax Revolt. Justin Owen is president of the Tennessee Center for Policy Research.

Related posts:

1. TCPR calls proposed tax increase “outlandish”
2. “Technical Corrections” is Code Name for a Tax Hike
3. An Unfair Exchange

by Michael Tanner & Justin Owen

In the days before the new health care law passed Congress last year, then-House Speaker Nancy Pelosi famously said that we would “have to pass the bill to find out what is in it.” Well, it has been a year since the Patient Protection and Affordable Care Act passed, and we are now learning what was in it – much to the detriment of Tennessee taxpayers, businesses, doctors and patients.

Here’s some of what we now know:

You probably cannot keep your current insurance plan. Although the president constantly reassured us that Americans would not be forced to change their current plans, that increasingly appears untrue.

If you get your insurance at work, you will almost certainly have to change plans. The administration itself now admits that more than two-thirds of companies could be forced to change the coverage they currently offer their workers. For small businesses, the total could reach 80 percent. The new plans will have to offer additional benefits and meet new federal requirements, likely making them more expensive.

Moreover, the law’s individual mandate continues to pose a threat to Tennesseans’ ability to keep their current coverage. That mandate not only requires everyone to buy insurance, it also requires insurance to meet strict government requirements, offering the benefits the government thinks you should have, not necessarily those you want or need.

It will cost more than advertised. The Congressional Budget Office officially “scored” the health care bill as costing $950 billion. However, those numbers do not reveal the new law’s true cost. For example, CBO’s estimates do not include roughly $115 billion in implementation costs, such as the cost of hiring new IRS agents to enforce the individual mandate. The arcane budget rules of Medicare, Social Security and the law’s new long-term care program also allow the government to count savings twice while ignoring future costs outside the budget window. Finally, the law front-ends taxes while deferring costs, providing a misleading 10-year budget outlook. True accounting suggests that the law will cost as much as $2.7 trillion over 10 years of full operation, adding $823 billion to the federal deficit.

Your premiums are going up. Tennesseans opening their health insurance bills can already see that their premiums are not going down. In fact, CBO estimates that premiums could double over the next six-10 years. Worse, the new law may actually be increasing premiums faster than they would otherwise rise. Some estimates suggest that the law’s new regulations have already added 7-9 percent to insurance costs.

Your taxes are going up. The health care law imposes more than $569 billion in new or increased federal taxes over the next 10 years. And it’s not just federal taxes that are rising. The law will add more than 700,000 people to Tennessee’s Medicaid rolls, driving up the cost of the state’s program by more than 25 percent. That means either state taxes will go up, or other state services will be cut.

It’s not getting any more popular. These are just some of the reasons why half of Tennesseans want to see the health care law repealed, according to a recent poll by Middle Tennessee State University. Now that Pelosi has given them a chance to see what is in the bill, Tennesseans are wisely saying “no thank you.”

Michael Tanner is a senior fellow at the Cato Institute and author of “Bad Medicine: A Guide to the Real Costs and Consequences of the New Health Care Law.” Justin Owen is president of the Tennessee Center for Policy Research.

Related posts:

1. Less Regulation is Solution to Keeping Healthcare Costs Low
2. TCPR applauds passage of “Health Care Freedom Act”
3. The Accidental Usher: How the Current Battle Over TennCare Reform Could put the Free Market Back Into Healthcare

The Tennessee Center for Policy Research has worked since its founding in 2004 to bring about meaningful education reforms in this state that will give parents a seat at the table and children a chance to succeed. As a part of those efforts, since 2009, we have called upon the Tennessee General Assembly to reform our state’s system of teacher collective bargaining, allowing teachers to be paid based on their performance and skills like the professionals they are.

We are therefore grateful for Speaker Beth Harwell’s leadership today in voting to send HB130 to the full House Finance Committee, which ensures that the important discussion of placing limits on collective bargaining continues. But for Speaker Harwell’s tie-breaking vote, we would be talking about the collective bargaining bill that died on the operating table. Fortunately, we still have the opportunity to return control to individual teachers by limiting the teachers union’s ability to stake its claim as the monopoly negotiator in school districts across our state.

This is a very important issue for anyone interested in bucking the status quo that has failed our teachers, our parents, our taxpayers, and most importantly our children, for decades. Collective bargaining is the main weapon used by teachers’ unions to thwart meaningful education reforms in our state. The Tennessee Education Association—the chief lobbying and political arm of the teachers’ unions—has consistently stood in the way of improving our education system.

The TEA has frequently urged lawmakers to press for more “parental involvement” in education. Yet, when a parental choice scholarship bill was proposed just last year to allow parents to choose where to send their children to school, the TEA characterized such measures as “destroying public education,” further attacking school choice advocates like Nobel Prize-winning economist Milton Friedman, saying they “would be perfectly happy to turn public schools over to some corporation and just let them run them.” This empty rhetoric in defense of the failed status quo has become all too common with the teachers’ unions.

But don’t think the unions oppose every cause on Capitol Hill. While they are always on the wrong side of effective education reforms, the unions believe strongly in other things, such as imposing a state income tax on Tennesseans, a measure they supported during the income tax battle a few years ago. Rather than spend their members’ hard-earned dues on improving education for both teachers and students, they are wasting these resources on a radical political agenda that the vast majority of Tennesseans diametrically oppose.

Our education system is in desperate need of reform, and the collective bargaining legislation voted out of subcommittee today will pave the way for reforms that benefit our teachers, our parents, our taxpayers, and above all, our children. Meaningful education reform should not be left to the whim of one political organization more interested in its own posterity than that of Tennessee’s children.

The Tennessee Center for Policy Research applauds those, including Speaker Harwell, for keeping the education reform dialogue open with their votes today.

Justin Owen, TCPR President

Related posts:

1. TCPR on Collective Bargaining
2. TCPR’s support of collective bargaining reform cited
3. TCPR discusses education reform

by Justin Owen

The state Senate recently voted to ensure that Tennesseans will not face an income tax in the future. The Senate is seeking to clarify that the state constitution outright prohibits an income tax. There is a solid chance the House of Representatives will do the same, beginning the process of putting the issue before voters in the November 2014 election.

While it is the position of the Tennessee Center for Policy Research that a state income tax is currently prohibited, recent attempts to revive the income tax debate make it necessary to confirm this by amending the constitution’s language.

The Tennessee Supreme Court has ruled that a tax cannot be levied on Tennesseans’ income from labor. However, while compelling precedent, nothing prevents the state’s highest court from doing an about-face if confronted with the issue again, nor does the ruling ensure that politicians will heed this directive.

Despite the Supreme Court’s position, former Gov. Don Sundquist sought to impose an income tax in 2002. Since that failed attempt, some lawmakers have consistently filed legislation seeking again to impose an income tax on Tennesseans.

Further, a 1999 state attorney general’s opinion argued that if properly worded, an income tax could be enacted by the legislature. The uncertainty of future Supreme Court decisions, ongoing legislative efforts and this opinion confirm the need to settle this issue once and for all.

An amendment clarifying that an income tax is indeed unconstitutional would finally render the persistent efforts by some to strip Tennesseans of their hard-earned income dead in the water.

There is something inherently un-American about taxing hard work and production. The adage goes that if you want less of something, tax it. American ingenuity and entrepreneurship have made us the most prosperous nation on Earth. Stifling economic growth by deterring people from making money is foolish public policy, and statistics appear to support this argument.

Tennessee is one of only nine states that do not tax income derived from labor. According to Texans for Fiscal Responsibility, every single day 20,000 taxpayers flee states with income taxes to settle in non-income tax states like Tennessee.

This taxation migration was made even more obvious by the 2010 U.S. Census results. In seven of the nine states that do not impose an income tax, population growth outpaced the national average. It appears that Americans are voting with their feet and settling in states where taxes are low and income taxes in particular are shunned.

Tennesseans — and Americans who are leaving income tax states in droves — have good reason to oppose this destructive tax. State income taxes lead to out-of-control government spending, hampering economic growth. Since 1967, states that tax income have seen a 42 percent increase in government spending and a 64 percent decline in personal income.

While Tennessee is facing its fair share of budgetary problems during the current economic downturn, our state’s residents fare much better than those of many states, especially those that rely on an income tax as their main source of revenue. Though slight, there has been a recent uptick in state revenues, signaling that a sales tax offers more stability than an income tax.

In late 2009, my organization partnered with the Show-Me Institute, a similar think tank in Missouri, to compare our two states. Over the past 50 years, Tennessee has outpaced Missouri in population growth, gross domestic product, personal income growth and employment, actually moving ahead of Missouri in three of these four categories.

A possible explanation for this trend? Unlike Tennessee, Missouri relies heavily on a state income tax. While there are certainly other contributing factors, as the study concludes, “Tennessee’s growing population and economy reflect the conventional wisdom that a friendly tax environment attracts both residents and businesses.”

For Tennessee to remain at the forefront of job creation and economic growth, state leaders must resist any attempt to impose a state income tax on Tennesseans. The best way to protect our hard-earned money will be to amend the Constitution, expressly stating that an income tax is forever banned in our state. This will make our current residents, as well as those who move here as a result, proud to call Tennessee home.

Justin Owen is president of the Nashville-based Tennessee Center for Policy Research, a free-market think tank.

Related posts:

1. State Senate Passes Resolution Clarifying that Income Tax is Unconstitutional
2. Tax Policy Gives TN Edge of MO
3. Income Tax Would Invite Pink Slips

by Richard Grant

A law that is not enforced might as well not exist. We see this in property rights, as well. An owner that fails to challenge those who use his property, whether land or trademark or any other form, over time risks losing control of that property. This is true for individuals, corporations and sovereign states. The failure to live on or defend one’s territory will result in its forfeiture to those who are willing and able to establish a presence there.

The failure to enforce a law will lead people to believe that it will never be enforced and allow them eventually to forget that the law exists. In this regard, the U.S. Constitution is no different from any other law.

The United States began as a decentralized federal republic within which the states retained sovereignty except for those powers specifically granted to the central government by the Constitution. It largely remains so, but over time the exercise of real power has gravitated toward the center.

The 10th Amendment of the U.S. Constitution states that “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” This amendment has not been repealed, but it has been neglected.

It was once taken for granted that the states were an integral part of a broader federal government.

But now when we speak of the “federal government,” we mean the central government not including the states. From the beginning, the natural exercise of its powers led the central government to push out the practical limits of those powers. War, and later the 17th Amendment, also reduced the practical influence of the states over the central government.

Politicians in any government are tempted to curry favor with voters by visibly, if selectively, spending money on them while de-emphasizing the real source of those funds. As the central government expanded its powers of taxation and money creation, it was increasingly able to buy the cooperation of the states for its own programs. State governments were happy to receive extra funding without having to raise state taxes. Although there were strings attached to the funding, the full burden of the new commitment would usually not be realized until later.

Distracted by such temptations, the state governments have unwittingly abetted the expansion of the central government and its encroachment on their areas of responsibility. Education is not a constitutionally authorized area of federal responsibility. But the offer of federal money weakened the states’ resistance to federal mandates and programs. The centralization of influence over education has weakened private authority and reduced the choices available to students and families.

The central government has overstepped its constitutional authority in the area of health care. Resource-wasting programs such as Medicare and Medicaid impose burdens on the states and all taxpayers. Had the states more presciently defended their spheres of sovereignty, they might not now be caught in such a regulatory and fiscal trap.

With the passage of the so-called Patient Protection and Affordable Care Act, the central government has claimed even more powers originally reserved to the states and the people. It is also unaffordable.

We now see state governments standing up to defend themselves, particularly in the areas of educational choice and freedom of choice in health care. They are returning responsibility to the people.

Dr. Richard Grant is a scholar at the Tennessee Center for Policy Research.

Related posts:

1. TN should say no to ObamaCare
2. Government Hand is Harmful
3. Constitution Keeps Us on the Straight and Narrow