5 days ago
Transparency of Tennessee business tax refund law in question
AT&T was among the corporations getting tax rebates from the state of Tennessee. (Photo: John Partipilo/Tennessee Lookout)
Tennessee's newly-released listing of companies netting a business tax refund creates the appearance of transparency without providing the public a true picture, according to an open government advocate.
Deborah Fisher, executive director of Tennessee Coalition for Open Government, said Tuesday the information posted May 31 on the Department of Revenue website should contain more exact amounts of refunds to the 60,000 companies that received an estimated total of $1.5 billion. The lists also should remain available for more than 30 days because removal lends itself to 'secrecy,' Fisher said.
When lawmakers passed the Republican-backed measure in 2024 at the request of Gov. Bill Lee, senators were loath to put out any public information. But the House demanded a modicum of openness before supporting Senate Bill 2103.
These are people threatening to sue the state, and they got $1.5 billion in refunds. Tell me who they are, tell me how much they got.
– Deborah Fisher, Tennessee Coalition for Open Government
That included posting the names of companies that receive the refunds in categories of less than $750, between $750 and $10,000 and more than $10,000.
'To say something is above $10,000 is not transparent, because it could be $10,500 or $100,000. This covers three years of tax payments that were calculated … and it is not inconceivable that some companies might get a lot of money back,' Fisher said. 'That's why (businesses) got the legislature to change the law.'
In addition, Fisher said the governor should release the amount that Lee Company received in the refund and that any lawmaker who applied for a refund should disclose the amount. Lee has consistently said his interest in the family company was placed in a blind trust during his governorship, which will run out in late 2027.
Most proponents of the legislation said last year it was necessary because of the threat of litigation, though state officials never revealed the names of companies challenging the legality of the state's franchise and excise tax. Others who supported the measure said it was good tax policy to slash the property tax for businesses statewide.
'Was it truly a legal threat or did they just want to give more money away to corporations who contribute to their campaign or who they're connected with?' Fisher said.
Besides the refunds, lawmakers cut the franchise tax — which is levied on companies in amounts based on net worth of capital — by $410 million annually, a move critics say is putting a dent in revenues to the tune of $335 million so far this year.
Lawmakers and state officials argued against listing more specific information on the rebates by saying taxpayer information is confidential. Fisher, though, said if the matter had gone to court, the information would have become public record, and the public would have had a better indication of how the state's franchise tax was faulty.
World's top businesses, Lee Company receive biggest Tennessee tax rebates
'Maybe it was cheaper to change the law,' Fisher said. 'But still, these are people threatening to sue the state, and they got $1.5 billion in refunds. Tell me who they are, tell me how much they got.'
Rep. Jeremy Faison of Cosby, chairman of the House Republican Caucus, defended the law Tuesday by saying every recipient of the 'significant tax cut' is listed on the state site for the public to search and save.
'I believe in transparency, and so do my fellow Republicans. That's exactly why the House made sure the public has easy access to this information,' Faison said via text message.
Only one Republican, Rep. Gino Bulso of Brentwood, voted against the bill, and only one Democrat, Rep. Johnny Shaw of Bolivar, voted for the bill last year. Otherwise, the measure passed along party lines with supermajority Republicans supporting it.
Democratic Rep. Sam McKenzie of Knoxville said Tuesday the list doesn't provide enough transparency and called it a 'self-serving' measure 'to keep the rich folks rich' and hurt working-class Tennesseans. He added that the policy enables businesses such as Lee Company to hide behind the refund ranges, even though they could have received much more than $10,000.
'It's obvious that they're ashamed of it. If they're not ashamed of it, they wouldn't allow it to sit out there for just 20 or 30 days,' McKenzie. 'It's an indictment.'
Democratic Rep. Caleb Hemmer of Nashville echoed those comments, saying the ranges of money are 'worthless' as far as transparency when Fortune 500 companies are lumped in with mom-and-pop businesses.
'They didn't want to put targets on some people's backs, but they're asking for pretty significant (refunds), $2 billion of tax revenue in a very odd and unique situation, and I think the more transparency the better,' Hemmer said.
Democratic lawmakers, Rep. John Ray Clemmons and Sen. Jeff Yarbro of Nashville proposed an alternative bill last year that they said would have enabled the state to avoid a lawsuit and continue to collect the business tax. Republican lawmakers declined to consider it. Yarbro's law firm, Bass, Berry & Sims, received a refund.
Several Senate Republicans declared a conflict of interest when voting for the bill in March 2024, including Sen. Shane Reeves of Murfreesboro, CEO of TwelveStone Health Partners, which is listed as receiving a refund.
Reeves said via text message Tuesday he was 'comfortable' with the reporting ranges in regard to the franchise and excise tax law and said they 'seemed like a fair compromise.'
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