NASHVILLE - Tennessee Senate Speaker Ron Ramsey says his focus in January will be on cutting the state's Hall income tax on investments and not reducing sales taxes on food beyond an earlier agreement.
Ramsey, R-Blountville, emphasized he still backs Republican Gov. Bill Haslam's recommendations to cut taxes on groceries from 5.25 percent to 5 percent in the budget that takes effect next July. Lawmakers cut the rate this year from 5.5 percent to 5.25.
But to the dismay of critics who say the sales tax on food unfairly hits lower-income Tennesseans, Ramsey said he doesn't think slashing it further is a good idea. Rather, he is plugging raising the exemption level for retirees subject to the Hall income tax.
"I do think it's blatantly unfair that we ask citizens to save for their retirement, to put money back so you aren't living just off Social Security," Ramsey told reporters earlier this week. "And yet when that time comes that you want to start drawing this money out of certain accounts, then you have to pay a tax on it. Well, that's just wrong."
Tennessee has no broad-based state income tax, but the Hall tax levies 6 percent rate on interest from bonds, notes and stock dividends.
Ramsey said he wants to raise exemption levels for those over 65. Since Jan. 1, people over 65 with total income less than $26,200 for a single filer or $37,000 for joint filers are exempt from the tax.
He said that, over time, he wants to boost the exemption high enough so that it's "irrelevant to most people."
Ramsey dismissed Democrats' assertions that the tax on groceries is one of the state's most unfair. It's a reliable tax, he said. The "truly poor" don't have to pay it because they use food stamps, Ramsey said.
Moreover, he said, "I think everyone needs a stake in their government. I think the sales tax on food is a fair tax."
Most Tennesseans don't realize the state is reducing the tax, he said, adding that most won't notice unless the tax is eliminated.
Senate Democratic Leader Jim Kyle, of Memphis, said Wednesday that moving to cut the Hall tax further as opposed to the sales tax on food "is not a good idea."
"The tax on food is an unconscionable tax, and we should do everything we can do and as quickly as we can to eliminate it," he said. "And I hope that a majority of the legislators feel that is more important to people that we not tax food than we tax investment."
Kyle said that when it comes to cutting the Hall tax on wealthy seniors, "if it's significant money [savings] to those folks, they can certainly buy food."