Call to Action: Following Federal Tax Reform Tennessee Must Take Action to Avoid State Tax Increase on Business
Legislators need to hear from you
As the session nears closure, The Tennessee Chamber’s tax committee has identified a major policy issue that needs to be addressed by the legislature this year: All Tennessee businesses that pay state Franchise & Excise taxes will likely see a tax increase if the legislature does not act. This is an economic development and competitiveness issue for Tennessee and all businesses who should see the full benefit of federal tax reform. Already Georgia has modified their tax base and we anticipate a number of other states are not far behind.
The Issue:
Tennessee Franchise and Excise tax liability is calculated from a federal calculated base, which following federal tax reform has expanded (the federal rates was lowered). If Tennessee maintains this same federal base to calculate state tax liability and maintains the current rate the state will collect more revenue that has not been anticipated. To avoid Tennessee businesses paying this increase, the Tennessee legislature needs to decouple from this federal base (either entirely or selectively in areas). The Council of State Taxation (COST) estimates Tennessee could over collect 12% of our F&E base which is approximately $100 million (conservative estimate). Unfortunately Tennessee already does not allow accelerated depreciation, so if we do not at least allow enhanced interest deduction. Inaction is a tax increase.
The Solution:
To maintain Tennessee’s competitive edge, the Tennessee Chamber has filed legislation by Senator John Stevens (R- Huntington) and Rep. Gerald McCormick (R- Chattanooga)
SB 2119 / HB 2310
that as amended will decouple Tennessee’s tax base in only two areas in particular (interest section 163 (j) and section 118 which avoids state grant taxation). State policy experts have objected to fully decoupling noting unintended consequences, the approach outlined above is a compromise approach and only decouples from only two areas. This approach basically splits the middle and will allow Tennessee to still collect a substantial portion of revenue.
The Importance of Acting Now:
Some have suggested holding off and waiting to see the full impact. The fear of the business community is that once revenue is collected and recognized it will be difficult to undue, especially with various groups competing for revenue. Tennessee’s business taxes overall have a higher burden than our competing states. We need to get ahead of our competition, especially with Georgia making modifications. In addition and more importantly, companies need to be able to predict their tax liability with stable tax policy.
Carl Hartley, Chair of the Tennessee Chamber’s Tax Committee testified before the Senate Finance Ways & Means Committee last week and summarized the Tennessee Chamber’s position, stating “
Our recommendation on behalf of the Tennessee Chamber of Commerce & Industry is to decouple from IRS section 163(j) [deduction for expensing interest payments], and also to set a policy statement that we are not going to tax grants from ECD.
”
Talking Points:
- What the Tennessee Chamber and business community is proposing is a fair approach that compromises on this issue, Tennessee will still see increased revenue from federal tax reform. Our approach basically splits the windfall
- Tennessee needs to do something, otherwise we fall behind. Already, Georgia has approved the provisions we are seeking and many other states are considering these, as well.
- Doing nothing is a tax increase. Federal tax reform is intended to help business invest and grow. Tennessee needs to do their part.
- Full decoupling has many unknowns, and we respect that concern, BUT we are only seeking two items [interest expensing 163 (j) and section 118] to decouple from the federal base
- This will have NO fiscal impact if we act this year. If we try to do it in future years, then that will be much more difficult
- Currently, Tennessee does not allow bonus depreciation. If we don’t decouple interest expensing, then Tennessee businesses are harmed in their ability to invest and grow. Our research shows us every other state that borders us allows bonus depreciation, we at least need interest expensing decoupled and section 118.
We need you to let your legislators know
,
no matter what sector you are in or the size of your business,
you support Sen. John Stevens’s (R-Huntington) and Rep. Gerald McCormick’s (R-Chattanooga) effort to
hold the line
and
prevent an unintended expansion of business taxes
in Tennessee. Their legislation
SB 2119 / HB 2310
will be amended to decouple state business taxes from the federal provisions for the interest expensing deduction and maintain the status for capital contributions. The legislation would preserve the tax treatment for these provisions prior to the expansion of the tax base caused by federal tax reform. Simply put, we want to apply the tax the same way in 2018 and future years, as it was done in 2017 and prior years. Addressing these two areas will provide a safe harbor for members of the business community who are facing additional taxes under redefinition of the federal tax law.
It is important to note. Six of our eight surrounding states are working to enact changes to their state business taxes to mitigate any negative impacts on business from federal reform. We must act this year to keep Tennessee’s tax structure competitive.
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Tennessee General Assembly: Weekly Calendars
Senate’s weekly calendar click
HERE
.
(check back Friday)
House of Representative’s weekly committee calendar click
HERE
.
Listings for the week ahead
Monday , April 9, 2018
- 12:00pm House Finance subcommittee, then full Finance
- No Senate Session
- 4:00pm House Floor Session
Tuesday, April 10, 2018
- 9:00am - 4:00pm House Committees
- 2:00pm Senate Finance
- 4:00pm House Calendar & Rules Committee (subject to change)
Wednesday, April 11, 2018
- 8:30am Senate Floor Session
- 9:00am House Floor Session
- 10:30am House Education, Administration & Planning
- 11:00am - 2:00pm Senate Committees
- 12:00pm - 3:00pm House Finance subcommittee, then full Finance
- 3:00pm Senate Finance
Thursday, April 12, 2018
- 8:00 House Calendar & Rules (tba)
- 8:30am Senate Floor Session
- 9:00am House Floor Session
- 11:00am State Building Commission in House Hearing Room 2
Note:
The House is operating under the “flow motion”. During this period it is advisable to be alert, closed committees can re-open and additional meetings can be announced, either held on short notice, rules regarding timely filed amendments are also be modified.
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Legislative Roundup...
Senate Judiciary Eliminates Troublesome Legislation
HB 2484
by Holt (
SB2336
by Green) –
Firearms “mulligan”
bill. The Senate Judiciary Committee quietly defeated legislation that would have removed criminal liability for possession of a firearm on posted premises if they left the premises when asked to do so. The Tennessee Chamber worked against this legislation based on concerns from member companies we received. Chamber members were concerned this legislation would create an exemption to prohibit firearms while working and on company property, creating a loophole in Tennessee’s posting law as well as infringe upon the private property rights of businesses and individuals. (
For non-golfers a “mulligan” is when a golfer is allowed to make an extra stroke allowed after a poor shot, the extra shot is not counted against their score.
)
SB 2480
by Hensley (
HB 2620
by Holt) –
Bathroom Bill
. The Senate Judiciary Committee disposed of a bill requiring the state attorney general to represent public school systems when they face lawsuits over sex-linked bathroom policies or, if he declines, that the state instead pay the legal fees of private attorneys. The House version had earlier won approval of a House committee under sponsorship of Rep. Andy Holt (R-Dresden), but the Senate sponsor, Sen. Joey Hensley (R-Hohenwald) could not get a member of the Senate committee to even make the necessary seconding motion and the panel’s chairman declared it dead without discussion – a marked contrast to extended debate in the House Civil Justice Committee and its subcommittee.
The Associated Press has a brief summary
.
SB 1710
by Dickerson (
HB 1749
by Faison) –
Medical Marijuana
legislation. This bill referred to as the “Medical Cannabis Act” was debated at length in the House over the past month, requiring the House Speaker to break a tie vote in subcommittee to move it forward. Last week following hours of emotional testimony in the Criminal Justice Committee, the body finally advanced a watered down version by the surprisingly strong vote of 9 to 2. The bill was referred to the Health Committee, where it was expected to receive additional scrutiny. However, this week it was withdrawn by the sponsor in the Senate Judiciary Committee. Senator Steve Dickerson (R- Nashville) said he knew he didn’t have the votes, and
pledges to be back next year
.
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The Tennessee Chamber of Commerce & Industry/Tennessee Manufacturers Association (TMA), is pleased to announce the
2018 TMA Statewide Tour
. This 13 date tour will feature TMA’s Denise Rice, who will update attendees on the state of Tennessee manufacturing, provide a recap on Tennessee’s 2018 Legislative Session & its impact on manufacturing, and conclude with a Q&A period.
Tour Locations include:
Franklin, Maryville, Clinton, Chattanooga, Knoxville, Cleveland, Memphis, Jackson, Gallatin, Nashville, Smyrna/Murfreesboro, Kingsport and Morristown
Presenting Sponsor:
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2018 Election Update: MTSU poll U.S. Senate Bredesen / Blackburn Updates: Governor Race Still Wide Open
Press release from Middle Tennessee State University
MURFREESBORO, Tenn. — Former Tennessee Democratic Gov. Phil Bredesen holds a 10-percentage-point lead over Republican U.S. Rep. Marsha Blackburn among state voters in a head-to-head contest for the seat being vacated by retiring U.S. Sen. Bob Corker, according to the latest MTSU Poll. Apparent voter favorites in the race for governor, meanwhile, include Republicans Randy Boyd, Diane Black and Beth Harwell as well as Democrat Karl Dean, and approval of President Donald Trump stands at 50 percent, unchanged from last October’s MTSU Poll.
The race for U.S. Senate-
In the race for U.S. Senate, 45 percent of Tennessee registered voters said they would choose Bredesen if the election were held tomorrow, while 35 percent said they would select Blackburn. Another 17 percent said they weren’t sure, and the rest declined to answer. “Bredesen is off to a good start, and Blackburn has some ground to make up,” said Dr. Ken Blake, director of the poll at Middle Tennessee State University. “But neither candidate has a majority, and with 17 percent undecided, four months to go until the primary and another three after that until the general, this is still either candidate’s race to win – or lose.” Dr. Jason Reineke, associate director of the poll, said Bredesen appears significantly more successful at attracting voters from outside his own party than Blackburn is at attracting voters from outside hers. “For example, 45 percent of self-described independents said they would vote for Bredesen, while only 33 percent of independents said they would vote for Blackburn,” Reineke said. “Bredesen attracted more cross-party voting, too,” Reineke added. “Twenty percent of Republicans said they would vote for Bredesen, while only 5 percent of Democrats said they would vote for Blackburn. Our polling during Bredesen’s time as governor showed him consistently attracting appreciable support among Republicans and independents as well as among his fellow Democrats. That record may be paying dividends for him now.”
Governor’s race still getting sorted out-
Meanwhile, favorability ratings among all state voters for gubernatorial candidates Boyd, Black, Harwell and Dean range from 30 percent for Boyd and Black to 26 percent for Dean and 23 percent for Harwell. Given the poll’s error margin of plus-or-minus four percentage points, the results can’t determine which, if any, of the four leads the others. However, the results do indicate that Republican Bill Lee and Democrat Craig Fitzhugh, both with 16 percent approval, significantly trail Boyd, Black and Dean. The only within-party difference the poll could detect was the significant gap between Lee’s 28 percent favorability rating among the sample’s 207 self-identified Republicans compared to the 47 percent and 49 percent favorability ratings for Boyd and Black, respectively, among the same respondents. Notably, large segments of the electorate say they neither favor nor oppose the candidates (between 19 and 27 percent) or don’t know how they feel about the candidates (between 13 and 32 percent), an indication that these attitudes are still forming.
Trump’s approval holding steady-
The poll also found that 50 percent of Tennessee voters approve of the job Trump is doing as president, while 41 percent disapprove, 8 percent don’t know, and the rest decline to answer. Similarly, 46 percent think Trump deserves re-election, 44 percent think he doesn’t, and 10 percent don’t know or give no answer.The president’s approval numbers are virtually unchanged from this past October, when the MTSU Poll found that 50 percent approved, 40 percent disapproved, and 10 percent didn’t know or gave no answer. Trump’s national approval figures during the poll’s field period showed nearly the reverse of those in Tennessee, with only about 41 percent approval and about 53 percent disapproval.“The president’s stable approval ratings in Tennessee could be a positive sign for Blackburn, who has been aligning herself with him in her campaign advertising,” Blake said. “But the same numbers indicate he is a polarizing figure, which could be a problem for Blackburn if she ends up needing help from voters outside Trump’s base.”
Approval for other key leaders
Looking at state voters’ approval of other key political leaders:
- 41 percent approve of Sen. Corker, compared to 45 percent in October
- 39 percent approve of Sen. Lamar Alexander, compared to 45 percent in October
- 58 percent approve of Gov. Bill Haslam, compared to 56 percent in October
- 47 percent approve of the Tennessee Legislature, compared to 48 percent in October
- 14 percent approve of the U.S. Congress, compared to 13 percent in October.
The scientifically valid poll of 600 registered Tennessee voters reached by Issues & Answers Network Inc. interviewers via randomly selected cell and landline phone numbers was conducted March 22-29 and has an error margin of 4 percentage points. The poll is supported by MTSU’s College of Media and Entertainment as well as by the School of Journalism and Strategic Media.
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Eastman Chemical Hosts Prestigious Innovators Roundtable for Chemistry Professionals
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Attention Chemistry professions, Eastman Chemical in Kingsport, Tennessee is hosting the GC3’s
13th Annual Innovators Roundtable
,
on May 8-10. This is a tremendous conference where sustainability and green chemistry professionals from Europe and North America gather to network, share and learn about the latest developments in green chemistry. The GC3 team has planned an exciting agenda that you can see
here.
More info can be found on the
GC3 Roundtable program page
.
To facilitate interaction and networking, the number of attendees is limited, so
Register Now
to reserve your seat at the table.
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Dept. of Revenue Prepares Rollout of New Taxpayer Website
The Tennessee Department of Revenue is preparing to add more taxes to its new online tax system.
At the end of
May 2018
the following taxes will be available on TNTAP:
- franchise and excise tax
- business tax
- Hall income tax
- motor carrier (IFTA and IRP)
To make sure taxpayers are prepared before they log on to file, the Department has created a page with the most up-to-date information:
www.tntapinfo.com
.
Visit this page to learn what’s currently available in TNTAP, what’s coming soon, and what you need to know in order to use the new tax system.
The Department also has a few tips for filing your most recent business tax returns before the tax is added to TNTAP:
Business Tax: Due Dates and Filing Tips
- Business tax is due by April 17, 2018 for businesses with a December 31 fiscal year end.
- Business tax will not be available to file in TNTAP until the end of May 2018.
- All returns and payments filed before May 18, 2018, should be filed using the Department’s existing business tax filing website: www.apps.tn.gov/biztax. From May 18 until the second rollout at the end of May, returns will not be processed online.
- Business tax returns and payments filed after the end of May 2018 will be filed in TNTAP.
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MLK50
: Remembering Dr. Martin Luther King Jr.
50 Years after Assassination
MLK assassination: Memphis holds remembrance events
It was 50 years ago Wednesday that Dr. Martin Luther King Jr. was assassinated while standing on the balcony of the Lorraine Motel in Memphis. Multiple events were planned in several cities across the United States to honor his memory.
Bells in Memphis and Atlanta rang to mark the anniversary -- a crowd outside the Lorraine Motel fell silent Wednesday evening as the bell began to ring there.
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Frist Art Museum Opens Exhibit through Oct. 14
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Fifty years after Martin Luther King Jr.’s assassination, the Frist Art Museum presents a selection of fifty photographs that were taken between 1957 and 1968. Nashville’s role in the national civil rights movement as a hub for training students in nonviolent protest and as the first southern city to integrate places of business peacefully warrants reexamination and introduction to younger generations and newcomers to the region. The exhibition also provides opportunities to consider how images and the media shape public opinion—a relevant subject in today’s news-saturated climate.
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Business and a Biscuit
Legislative Series
A Fast Paced Preview of the Legislative Week Ahead
Week #12: Monday, April 9, 2018
10:00am – 10:30am CT
Location:
TN Chamber Office, 414 Union Street, Nashville, TN 37219
**Join in person or dial-in by phone**
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Election 2018 is Here
The list of candidates who filed with us (Governor, US Senate, US House) is
posted
.
#GoVoteTN
The list of General Assembly candidates (excluding complete info for Davidson) is
posted
.
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Nashville Transit Referendum
The rhetoric is heating up, early voting begins April 11
The
Tennessean
has a good read on the arguments being made by both sides on Nashville’s transit referendum, election day is May 1st. Nashville voters will begin voting next week on a controversial plan dubbed "Let's Move Nashville" — first proposed by former Mayor Megan Barry and now championed by Mayor David Briley. The plan calls for an increase in four taxes — including a 1-cent increase to the sales tax — to pay for 26 miles of light rail on five major corridors, a downtown connector tunnel, rapid transit on other roads, enhancements to city buses and other upgrades.
Based on the experiences of other cities, and political realities of a do-over, Nashville’s transit backers say a defeat could set back their cause between five and 10 years. But critics of the plan slam the now-or-wait logic as a "scare tactic" — a way to get people who might find flaws with the plan to vote for it anyway because they fear this is their only chance.
Read more here
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