by Walter Blanks Jr
Tennessee lawmakers spent this session advancing the priorities and values voters sent them to Nashville to fight for. From empowering parents with school choice to cracking down on illegal immigration, expanding Second Amendment rights to protecting free speech on college campuses, the 114th General Assembly moved aggressively on nearly every front. This was not a session of half-measures.
But not every bill that crossed the finish line deserves a victory lap. Governor Lee upheld his conservatism when he vetoed Senate Joint Resolution 48, a 24 percent hike on 911 fees that had no business passing in the first place, especially not when 911 centers are already sitting on over $300 million in reserves. His veto mattered, and now Governor Lee has one more opportunity to finish this legislative session off on the right foot. The cross-border tax bill on his desk is a tax increase masquerading as an immigration crackdown, and it deserves the same fate.
SB 2166 / HB 2502 is now sitting on Governor Lee’s desk and is marketed as a strong immigration enforcement measure, but the remittance tax is ultimately just a tax hike on some of Tennessee’s most valuable citizens. The service member sending money home to his or her family overseas won’t be taxed once, it will be taxed three times on the same dollars. The missionary supporting a church abroad, the legal immigrant supporting aging parents back home. All of them will pay more, not because they broke any law, but because the money is leaving the country. The same thing applies to a small business that imports good from overseas and pay via one of many money transmitters.
Cracking down on illegal immigration is a fight worth having, but this isn’t the way to go about it. Tennessee would be just the second state — behind Oklahoma — to impose a remittance tax, and the unintended consequences are severe. When you make regulated money transfers too expensive, people don’t stop sending money; rather, they find other vehicles. Faith-based workers, service members, and legal immigrants may seek out unregulated channels that are harder to track, harder to tax, and far less safe. By trying to hold undocumented immigrants accountable, this bill ends up making it easier for money to fall under the radar.
There’s also a constitutional problem that no lawmaker should ignore. The Commerce Clause reserves the regulation of international trade for the federal government. States don’t get to set up their own “toll booths” on cross-border transactions. Washington already heavily regulates international money transfers, and when Tennessee layers its own tax on top of that same activity, it’s muscling into federal jurisdiction. This tax punishes Tennesseans simply for participating in international commerce. That’s not just bad policy — it’s unconstitutional.
Governor Lee should veto SB 2166 and HB 2502. Other voices like Americans for Tax Reform have already sounded the alarm on what this bill really is – a tax hike.
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Walter Blanks Jr is the Executive Director of The Legacy Society.
