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27 Vand. L. Rev. 475 (1974)
Constitutional Limitations on Income Taxes in Tennessee

handle is hein.journals/vanlr27 and id is 489 raw text is: Constitutional Limitations on Income
Taxes in Tennessee
Walter P. Armstrong, Jr. *
Tennessee is one of only ten states' that do not impose a general
personal income tax.2 A general income tax has been attempted
twice, and twice the Tennessee Supreme Court has declared it in-
valid under the state constitution.3 For 100 years that court has
construed the taxing provision of the constitution4 to limit the
legislative power to the imposition of privilege taxes, uniform ad
valorem property taxes, and taxes on the income derived from
stocks and bonds. From time to time the court has interpreted
privilege expansively, sustaining taxes on such diverse subjects as
qualification of foreign corporations,5 corporate net earnings,' stor-
age of gasoline,' and admission to theatres in Knox County8 as
privileges. Yet it has steadfastly refused to use the same rationale
to uphold a general income tax. And applying the constructional
device of exclusion by affirmation, the court has maintained that
the express constitutional grant of authority to tax the income from
stocks and bonds implicitly denies the legislature the power to levy
any other sort of income tax.9
Recognizing the severely regressive impact of the current Ten-
nessee taxing system at low income levels,' and faced with a pre-
* Member Tennessee Bar; A.B., 1938, LL.B., 1941, Harvard University.
1. The other states that do not impose general personal income taxes are Connecticut,
Florida, Nevada, New Hampshire, New Jersey, South Dakota, Texas, Washington, and Wyo-
ming. CCH STATE TAX GUIDE    15-200 to -935 (1973).
2. Tennessee imposes a tax on the personal income derived from stocks and bonds.
TENN. CODE ANN. §§ 67-2601 to -2635 (Supp. 1973).
3. Jack Cole Co. v. MacFarand, 206 Tenn. 694, 337 S.W.2d 453 (1960); Evans v.
McCabe, 164 Tenn. 672, 52 S.W.2d 159 (concurring opinion at 52 S.W.2d 617) (1932).
4. This provision is article 2, § 28 of the Tennessee constitution.
5. Camden Fire Ins. Ass'n v. Haston, 153 Tenn. 675, 284 S.W. 905 (1926).
6. Bank of Commerce & Trust Co. v. Senter, 149 Tenn. 569, 260 S.W. 144 (1924).
7. Foster & Creighton Co. v. Graham, 154 Tenn. 412, 285 S.W. 570 (1926).
8. Knoxtenn Theatres, Inc. v. Dance, 186 Tenn. 114, 208 S.W.2d 536 (1948).
9. Evans v. McCabe, 164 Tenn. 672, 52 S.W.2d 159 (1932), relied on in Jack Cole Co.
v. MacFarland, 206 Tenn. 694, 337 S.W.2d 453 (1960).
10. In 1970, Tennessee property and sales taxes absorbed 11.2% of the income for
households with an annual income of $2,000 or less, whereas for families with incomes of
$25,000 or over the tax burden amounted to only 3.1%. TENNESSEE TAX MODERNIZATION AND

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