NASHVILLE – Local governments would not lose revenue after repeal of the Hall tax under legislation sponsored by Senator Brian Kelsey (R-Germantown). Kelsey, who continued to assert that the time is right for repeal of the tax, filed a “hold harmless” amendment today which calls for providing cities and counties payment from the state based on an average of the last five years of Hall tax receipts.
“This amendment ensures we repeal the Hall tax without cutting one dime from state or local government,” said Senator Kelsey.
The Hall tax is a six percent tax on interest and dividends enacted in 1929, with 3/8 of the revenue going to cities and counties and the remainder going to the state. Almost half of those who pay the Hall tax are 65 or older with nearly 9 of 10 individuals earning less than $34,000 per year in investment income.
Repeal of the tax has stalled in past sessions because critics claimed there was not enough state revenue to pay for the tax cut.
“This is the year we will find out whether politicians are serious about repealing this tax, which unfairly penalizes those who have saved for retirement,” Kelsey added. “We have a $600 million surplus, half of which is expected to be available in future years, according to one of our state’s best economic forecasters.”
Kelsey referred to a recent statement made by University of Memphis Economist Dr. John Gnuschke: “While substantial budget fluctuations occur, the natural growth of state tax collections should exceed $300 million. Over collections could exceed $300 million as long as state spending is held in check,” Gnuschke said.
The legislation can be considered by the General Assembly when it reconvenes in January and would be implemented the following January 1, 2017.
Senator Kelsey represents Cordova, East Memphis, and Germantown. He serves as Chairman of the Senate Judiciary Committee.