[Congressional Record Volume 143, Number 46 (Thursday, April 17, 1997)]
[Senate]
[Page S3361]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. THOMPSON (for himself and Mr. FRIST):

  S. 613. A bill to provide that Kentucky may not tax compensation paid 
to a resident of Tennessee for certain services performed at Fort 
Campbell, KY; to the Committee on Finance.


                 FORT CAMPBELL TAX FAIRNESS ACT OF 1997

  Mr. THOMPSON. Mr. President, today I am introducing legislation to 
provide much-needed tax relief to the residents of my State who are 
employed as civilians on Fort Campbell, KY. These Clarksville area 
Tennesseans are hard working citizens who, I believe, are being taxed 
unfairly by the Commonwealth of Kentucky.
  Fort Campbell is the home of the Army's famous 101st Airborne 
Division. This installation straddles the border between Tennessee and 
Kentucky. In fact, 80 percent of it lies within the State of Tennessee. 
But because the post office is located on the Kentucky side of the 
base, it is best known to most people as Fort Campbell, KY.
  Civilian residents of both Tennessee and Kentucky are employed by the 
Federal Government to perform important nonmilitary functions at Fort 
Campbell. Approximately 2,000 of the Tennesseans who work on post are 
employed on the Kentucky side in the schools, at the post office, at 
the post exchange, and on the primary airfield. Unfortunately, these 
Tennesseans are forced to pay income tax to the Commonwealth of 
Kentucky of up to 6 percent of their wages, in addition to the sales 
and excise taxes they pay to their home State of Tennessee.
  Because the State of Tennessee does not have an income tax, 
Kentuckians employed on the Tennessee side of Fort Campbell do not pay 
income tax to the State of Tennessee. Nor are Kentuckians required to 
pay Tennessee sales tax on Fort Campbell. All of the facilities on the 
Tennessee side of Fort Campbell to which Kentuckians have access, the 
KFC and the Taco Bell, for example, are exempt from State sales tax. It 
is only when a Kentucky resident leaves post that he or she becomes 
subject to Tennessee sales tax on purchases made in the State.
  Mr. President, I believe it is unfair of Kentucky to impose income 
tax on Tennesseans, because Tennesseans who work on the Kentucky side 
of Fort Campbell do not consume any services provided by the 
Commonwealth. Fort Campbell is a Federal installation. All emergency 
fire, police, and medical services on post are provided by the Federal 
Government, not the Commonwealth of Kentucky. All roads on Fort 
Campbell, both on the Kentucky and the Tennessee side, are maintained 
by the Federal Government. Water and sewer services are paid for by the 
Federal Government. If a Tennessean who worked on the Kentucky side of 
Fort Campbell were laid off, he or she would not be eligible to 
obtain unemployment benefits from Kentucky, despite the fact that he or 
she had been paying income tax to the Commonwealth of Kentucky. 
Finally, Tennesseans have no voice in the Kentucky legislature to 
affect change to this law. Tennesseans are being unfairly taxed without 
the benefit of representation--a principle anathema to this country. As 
I see it, the Commonwealth of Kentucky is receiving free money from 
residents of Tennessee who work on a Federal installation that happens 
to border their State.

  And although Kentucky likes to argue that the residents of 
Clarksville are not forced to work on the Kentucky side of Fort 
Campbell, employees are often moved on the base where a change of 
buildings means a change of State. A Tennessean forced to move into a 
Fort Campbell job across the border takes an automatic pay cut of up to 
6 percent--just for moving across the street. This situation has been 
the cause of significant morale problems at Fort Campbell. According to 
Kentucky, however, those employees can escape paying the income tax by 
quitting their jobs. I find this alternative an unacceptable one. It is 
for this reason that I am introducing legislation to prohibit Kentucky 
from imposing its income tax on these Tennesseans employed either by 
the Federal Government or by a contractor with the Federal Government 
at Fort Campbell. I am pleased to be joined by my colleague, Senator 
Frist. Congressman Ed Bryant has introduced the similar legislation in 
the other body.
  Let me provide some history on this issue. According to legislation 
enacted by Congress in 1940, the Commonwealth of Kentucky is permitted 
to impose its income tax on Federal employees working in the State. 
This legislation, the Buck Act, repealed a prior law prohibiting States 
from imposing income tax on individuals who live or work on Federal 
property. However, Congress has also granted exemptions from State 
income tax to classes of Federal employees based on their obvious 
special circumstances: military personnel and Members of Congress and 
their employees. In addition, Congress enacted legislation in 1990 to 
exempt Amtrak employees from State taxation in the States in which they 
do not reside but through which they travel while working. Congress 
intended these exemptions to provide relief from inequitable 
situations. The Tennesseans employed at Fort Campbell also merit an 
exemption.
  Mr. President, I firmly believe that a State has the right to raise 
revenue in whatever manner its residents believe is most appropriate. 
In the case of Tennessee, residents have chosen sales and excise taxes 
to fund their cost of government--only one of six States in the United 
States without an income tax. But it should be noted that Kentucky has 
entered into reciprocal tax agreements with surrounding income tax 
States to ensure that Kentuckians are treated fairly. Unfortunately, 
Kentucky has refused to negotiate any type of reciprocal tax agreement 
with Tennessee, because it knows it has Tennesseans over a barrel. 
Prohibiting the Commonwealth of Kentucky from taxing Tennesseans 
working on the Kentucky side of Fort Campbell is the best way to 
resolve this inequitable situation.
  During this week in April Americans are reminded of their obligations 
to government. I believe that Americans are willing to pay their fair 
share of taxes, but citizens should not be expected to pay tax to a 
government from which they receive nothing and in which they have no 
voice.

                          ____________________