Tennessee Lawmakers Get Behind Investment Income Tax Phase Out
Tennessee may soon join the exclusive club of states without an income tax. Though it does not tax wage income, the Volunteer State does levy a six percent tax on dividend and interest income, known as the Hall Tax.
The charge to remove the Hall Tax, the biggest fiscal impediment preventing the state from reaching its full economic potential, is being led by State Senator Mark Green & Rep. Charles Sargent, who chairs the House Finance Committee. At press conference last week at the state capitol in Nashville, Sen. Green & Rep. Sargent unveiled a bill to repeal the Hall Tax over six years.
The Tennessean, the state’s largest newspaper was on hand at last week’s press conference and reported on the compromise amended legislation that will be the vehicle that moves forward through the legislative process between now and session’s end next month:
“When the history of the Hall tax is written, the beginning of the end will be today,” said Senator Green. “Green…will sponsor Senate Bill 1427, while state Rep. Charles Sargent, R-Franklin, will sponsor the bill’s companion in the House, HB 1367.”
Also on hand at last week’s press conference was Americans for Tax Reform president Grover Norquist, who explained why it is imperative for TN to become a true no income tax state in 2014:
"We have no income tax in eight states, and there's sort of no income tax in Tennessee. You want to be competitive, and the other states are going to zero now," Norquist said, according to WPLN. "The guys in Kansas will be in zero, before the Hall tax goes away. North Carolina will be in zero -- under this bill -- before the Hall tax goes away."
Norquist reminded legislators of the fiscal competition coming from other states and that now is no time for Tennessee legislators to rest on their laurels if they don’t want to be surpassed by their neighbors:
"Getting rid of the Hall Tax is an extremely important message - not just an important thing for businesses or individuals looking to stay in Tennessee or move to Tennessee, but the rest of the states are looking at this and making decisions on following in this direction.”
Committee hearings on the Hall Tax repeal bill are expected later this month. ATR will be testifying in favor of the repeal and will continue to encourage TN legislators to support Sen. Green & Rep. Sargent’s consensus bill. For more information on how the Hall Tax hurts the Tennessee economy and whom it affects, read this recent Forbes column by ATR’s Patrick Gleason. Stayed tuned to ATR.org for more updates on this important matter as it moves through the legislative process.
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