This week, the legislature is slated to take up Gov. Bill Lee’s 2021-2022 state budget. As part of the budget process, legislators are expected to discuss the final repeal of the professional privilege tax, a $400 a year tax on those in certain occupations. The tax was drastically cut last year with the elimination of 15 professions from that list, but seven professions still must pay what some call the last vestige of an income tax in Tennessee.
But the Biden Administration and Congress are trying to stop tax cuts like these. Last-minute language was inserted in the latest COVID relief package that would prohibit states from using their share of COVID relief to either directly or “indirectly” cut taxes over the next four years. The uncertainty provided by this broad language led Tennessee Attorney General Herb Slatery and his Kentucky counterpart to file a lawsuit against the Biden Administration last week. General Slatery rightly argues that “The states have a constitutional right to implement their own tax policy” rather than surrendering to “Washington’s attempt to override what only our elected officials in Tennessee are authorized to do.”
Under no circumstances should the federal government be able to usurp the decisions of our governor and state lawmakers when it comes to the taxes it chooses—or chooses not—to impose. It would be a particular affront to federalism if D.C. politicians got to dictate whether the professional privilege tax remains on the books just because they just happen to at the same time be dangling even more debt-funded federal money before the states.
Repealing the professional privilege tax has been an ongoing effort and should continue until it’s gone for good. But as General Slatery noted in his lawsuit, that decision and any other to cut taxes should rest at the state Capitol in Nashville and nowhere else.