An amended bill on the Hall Tax has passed the Tennessee Senate with Senate sponsor Mark Green calling the immediate 17 percent cut in targeted tax in the governor’s budget as "tremendous progress for the year, but embracing the historic elimination of Tennessee’s remaining tax on income."
While Senator Green sought a full repeal of the Hall Tax on income, a compromise was struck cutting the tax from six percent to five percent, with a statement "reflecting the legislature’s intent to cut it every year going forward until it is abolished."
“While this is not all of what we had hoped for, it is one of the largest tax cuts in state history,” said Senator Green, vice chairman of the Senate Commerce Committee. “The best place for the earnings of our citizens is in their own personal budget and not the state’s to spend.”
The Hall Tax is one of the staples of some small towns with some wealthy residents, including Lookout Mountain, Tn.
The Haslam Administration’s budget passed last week by both chambers of the General Assembly included an appropriations notice anticipating a one-percent reduction in the collection through the Hall Tax – a 1929 law that had formerly impacted wealthy Tennesseans.
The $34.8 billion state budget noted $27.7 million less in the 2017 budget which would result from a one-percent cut, taking the rate from the current six percent to a five-percent rate applied to interest and any dividend that exceeds $1,250 per individual or $2,500 for married couples.
Senator Green said, “My pledge has been consistent and firm to keep more of Tennesseans’ hard-earned wages and savings out of the hands of government and bring our needed funds into our state treasury through a strong, vibrant economy with jobs and confident investment and spending. Government spending does not yield the same as the same wealth in the hands of its citizens.”
He said, according to IRS data, within the last five years, 56 percent of Tennessee taxpayers who reported receiving dividends were households earning less than $75,000 annually. Further, 40 percent of the state’s households receiving a dividend earned less than $50,000. The passage of SB 0047 and the companion HB 0813 "begins a phase out of the punitive tax on those who save and invest over a period of five years," he said.
Senator Green said, "I first drafted a version of this bill my rookie year in the senate, 2012.
In the four years I’ve worked the bill my fellow senators, many of whom have worked to repeal the Hall Tax themselves for years, helped me amend it. We will not stop until the tax is completely gone. Together we developed a bill that works to encourage retirees and entrepreneurs to move to Tennessee.”