Bredesen is Right, Again
A Tennessee state legislator wants to de-couple the state's inheritance tax from the federal estate tax, saying that otherwise as the federal tax is phased out it will cost Tennessee millions of dollars. State Rep. Mike Turner, a Nashville Democrat, is pushing legislation to keep Tennessee's death tax alive and kicking, but Gov. Phil Bredesen's administration disputes his estimates. The administration says the expected loss of revenue is much lower, and says it is willing to live with it.

Bredesen's finance commissioner, Dave Goetz, said: "We're looking at the actual impact and are willing to absorb the impact." Goetz said inheritance taxes are particularly burdensome to family farmers who cannot pass their property on to their children without paying the taxes. And the spokesperson for Bredesen's revenue department said Turner's proposal "is not the direction that the administration wants to go in," according to The Tennessean.

As quoted in Nashville City Paper, Revenue Department spokesperson Emily Richard said: "They’re not discussing the future of this. It's not a direction that they want to take. We understand the lawmaker's position. But the bottom line is ... out of a $21.5 billion budget ... we're not talking about all that much money."

Bredesen, allegedly, is a Democrat, but once again on fiscal issues he is showing himself to be a fiscal conservative with the right instincts on taxes. The inheritance tax is a job- and business-killer that Tennessee - even in a tough budget year - can afford to live without.

Tennessee collected a paltry $70.4 million from inheritance taxes last year, less than half of one percent of the total state budget. Under new tax laws pushed through Congress by the Bush administration, the federal government is phasing out the death tax in 2005-06. Turner touts estimates the phase-out will cost the state $6.35 million in lost revenue this year, but the Bredesen administration calculates the lost revenue at $2.5 million. Either figure is tiny in a $21.5 billion state budget.

Bredesen can live with that. So can small-business owners, family farmers and others who will benefit from the phase-out of Tennessee's death tax - if, indeed, Bredesen sticks to this policy. If he does, Bredesen will strengthen his image as a fiscal conservative, while fellow Democrats like Mike Turner remain mired in the increasingly irrelevant and impotent class-warfare tax-the-rich rhetoric of the past.

With anti-tax conservatives and Republicans increasingly ascendant in Tennessee politics, Bredesen's approach is the best chance the state's Democratic party has to stave off the GOP and retain a measure of power in Nashville. Turner's approach is a recipe for further decline.

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I've posted this commentary over at PolState.com. There's a commenting feature over there, so let me know what you think.

UPDATE: Some Georgia Democrats also want to decouple their state's death tax from the federal death tax and deny Georgians the tax cut currently coming to them.