Tennesseans, unlike the residents of many other states, fortunately do not have a general state income tax. But most unfortunately, Tennessee does have the “Hall income tax,” which is applied to dividends and interest earned from stocks and bonds. That tax hits many of our senior citizens.
It would be good to abolish it.
The Hall tax was named for its Senate sponsor when it originated in 1929. Now, more than eight decades later, there commendably are many Tennessee legislators proposing to amend or repeal it.
Under the Hall tax, the first $1,250 in stock and bond income is exempt. Single senior citizens receiving less than $16,200 in total annual income and couples receiving less than $27,000 in income are exempt. But the 6 percent levy hits about 127,000 Tennessee taxpayers, including many who are retired.
Eight bills have been filed in the General Assembly to reduce the Hall tax or to get rid of it.
Gov. Bill Haslam, Lt. Gov. Ron Ramsey and many other legislators reportedly favor a change in the tax. They back a bill that would raise by $10,000 the annual income exemption for individuals and couples over age 65. That would reduce tax collections by about $1 million.
Haslam told The Tennessean newspaper in Nashville: “I just think it’s good policy in Tennessee. If you’re retired and living on dividends, I’m not sure why you should be treated so much different from someone who’s living on a salary.”
But eliminating the Hall tax would be preferable. Some who oppose the tax argue that repealing it would boost the Tennessee economy in addition to providing just tax relief for Tennessee retirees and others.
Doing away with the Hall tax not only would benefit our senior citizens, but should make Tennessee more attractive to economic development. That ultimately could create more state revenue by expanding the economic base. That would be beneficial for all.