Hall Tax Cut by 1% for 2016 with Full Elimination Ahead
NASHVILLE, Tenn. (April 19, 2016) – As the 109th General Assembly approaches its sine die adjournment, an amended bill on the Hall Tax has been passed the Tennessee Senate with Senate sponsor, Mark Green, MD gladly accepting the immediate 17% 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 Green sought a full repeal, a compromise was struck cutting the tax from 6% to 5%, 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,” noted Dr. 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 Haslam Administration’s budget passed last week by both chambers of the General Assembly included an appropriations notice anticipating a 1% 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 1% cut, taking the rate from the current 6% to a 5% rate applied to interest and any dividend that exceeds $1250 per individual or $2500 for married couples.
“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,” concluded Green, president and CEO of AlignMD headquartered in Clarksville.
According to IRS data within the last five years, 56% of TN taxpayers who reported receiving dividends were households earning less than $75,000 annually. Further, 40% 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.
“I first drafted a version of this bill my rookie year in the senate, 2012” observed Dr. Mark Green. “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.”