For those folks who don’t realize it, Tennessee does have a state income tax; it’s called the “Hall Income Tax.” The Hall Income Tax applies to the income received by folks from stocks, bonds and interest. Some of the revenue generated by the Hall Income Tax is parceled out to Tennessee counties and municipalities.
When he was running for governor, Bill Haslam promised he would phase out the Hall Income Tax. Before taking over the legislature, most Republican candidates running for the Tennessee General Assembly claimed they wanted to repeal the Hall Income Tax. Instead, we have proposals to spend more and more tax dollars. Governor Haslam’s effort to pass Insure Tennessee, as well as his current tour to soften folks up for a hike in the gasoline tax. That doesn’t even account for the wasted money spent on the new state logo and the computer glitch that caused tens of millions of dollars to simply disappear.
I will be the first to say that I don’t begrudge money spent on the local level – – – cities and counties. Those governments are closer to the people, have less sprawling bureaucracies and one can generally see the results of money spent directly. The argument against repealing the Hall Income Tax is that it would deprive cities, counties and the state of much needed revenue. Memphis gets the biggest slice of the pie from the Hall Income Tax – – – $14.8 million. Nashville is a close second with $14.6 million. The City of Knoxville receives $10 million. The municipal governments make out far better than the county governments. Knox County only receives $3.3 million, but Shelby County (and one out of every four Tennesseans live in Shelby County) gets $1.5 million, just barely ahead of Collierville, Tennessee. Revenue generated from the Hall Tax is only a fraction of the overall State of Tennessee budget.
I’m not going to argue that county governments provide many more services than city governments; I will say, that many city governments seem to have overly lavish retirement and benefit programs for retirees. Knox County doesn’t offer an opulent retirement program for any county employees, except for the Sheriff’s Department. The people of Knox County are to blame for that one, as we voted it in ourselves with quite a bit of nudging from the Sheriff’s Department. Many of those retirement programs call for automatic step increases or Cost-of-Living Adjustments every year. You’ve heard of compound interest? That system is one of compound expenses.
There’s less and less money to go around and more and more folks wanting something for free. A lot of folks, usually liberals with their plantation mindset, holler that means taxes must be raised. There are mighty few people urging any segment of government to live within its means.
Over about the last decade, if not the last two decades, the only real growth in spending in Knox County has been absorbed by two departments: the schools and the Sheriff’s Department. Everybody else has had to make do and live within their means and there are a lot of those other departments scraping by.
The Hall Income Tax generated $303 million, with the State of Tennessee getting $189 million while city and county governments divided the remaining $114 million.
The idea of an income tax on stocks and bonds probably makes some people shrug and think it’s just another tax on the wealthy. According to Senator Brian Kelsey of Germantown, almost half the folks who pay the Hall Income Tax are 65 or older. Senator Kelsey also says almost 9 out 10 folks who pay the Hall Income Tax have less than $34,000 in money derived from investment income from stocks and bonds. Senator Kelsey says he is going to try and repeal the Hall Income Tax during the coming legislative session.
Just think about how many times we pay taxes on certain items. You pay a hefty sales tax when you buy an automobile. For most people, that sales tax is financed, unless you have the good fortune to pay it out of your pocket or pay cash for the car. When the car is sold as used, someone is paying sales tax on it yet again.
People aren’t elected to the Tennessee General Assembly to protect governments; they are elected to represent people. It’s awfully easy to pick at folks who have been successful and complain the wealthy aren’t paying their fair share. Let’s not forget there are a mighty lot of folks now who pay little or nothing at all, living off the hard-earned tax dollars of others. Everybody should have some skin in the game.
Tennessee is rapidly becoming a state of choice for retirees and that will change unless the Hall Income Tax is phased out.
Republicans promised to phase out the Hall Income Tax. My question is what phase are we in exactly?