It looks like the tax increases planned by Governor Bredesen and Revenue Commissioner Reagan Farr may be in trouble. The bill has stalled.  And it appears it will remain in that state–a legislative coma, if you will.

From Tom Humphrey at the KNS:

NASHVILLE – A bill that would bring an estimated $27.2 million in new state revenue stalled in a Senate committee Monday after some provisions were criticized by lawyers and lobbyists representing affected businesses.

Gov. Phil Bredesen, meanwhile, said he viewed the so-called “technical corrections bill” as “a very appropriate thing.”

“It’s hard to imagine why the legislative leadership is so interested in protecting a small loophole for a bunch of well-off people,” the governor said in responding to a question at a news conference.

Wow.  Somebody call Dave Cooley back into the circle of advisors.  He would have never let Bredesen say anything snooty like that.

Are family owned businesses are a “bunch of well-off people?” And this from an accomplished businessman like Bredesen who could certainly PERSONALLY finance the Party Bunker construction?

Gee whiz.  Where’s Dave Cooley?  Bredesen’s killing himself.

Here’s the news:

Two Washington, D.C., attorneys criticized another provision of the bill that would change the language in Tennessee law for taxation of downloaded books, movies and music.

Farr contends such downloaded items are already clearly taxable under a law that took effect Jan. 1 and were arguably subject to tax before that. Most major sellers of downloaded goods are already paying Tennessee sales tax, Farr said.

But Stephen P. Kranz, who said he advised companies including Microsoft and Time-Warner, and Marie Kalamaras Lee, legal counsel on tax policy for the American Electronics Association, said they disagreed with Farr’s interpretation.

I’m no attorney, but from my little ‘ole common sense perspective, I disagree with Farr’s interpretation as well.  Farr contends that a music file, or similar downloaded file, is actually a piece of software that performs a function on your computer or iPod.  Hmmm.  In carrying forward this legal form of gymnastics, would a youtube video be software?  I’m not seeing it. (And note, as I posted earlier, previous letter rulings agreed as well.)

When the bill came up for a vote, Senate Democratic Caucus Chairman Joe Haynes, D-Nashville, declared he wanted to amend the bill to delete both the FONCE provision and the downloading tax provision.

Thank you, Senator Haynes.

With that, Sen. Jim Kyle, D-Memphis, sponsor of the “technical corrections bill,” asked for an indefinite delay in the vote. He noted that Bredesen is counting on the $27.2 million in new revenue – $15 million of that coming from the FONCE provision – toward balancing the state’s budget in a time of cutbacks.

Thanks to bipartisan support against these new tax provisions, it looks like Tennesseans will keep more of their hard-earned dollar in their pockets.

Please note: It’s not completely dead.  Stay alert and in contact in with your State Reps. and Senators. Bredesen will no doubt be twisting arms and offering what taxpayer funded goodie-baskets he can dig up in a very tight year.