Tennessee legislative leaders have, for the most part, put off talk of tax cuts until after the budget picture is clearer late in the session. But Lt. Gov. Ron Ramsey said he anticipates senators will start discussing his plan to reduce the Hall tax as early as next week.
Gov. Bill Haslam, who has so far said there’s no room in this year’s budget for that tax cut, stopped short of saying what he’d do if the Legislature approves it.
“It’s a question of what all can you do at the same time,” Haslam told reporters Wednesday when asked if he’d support Ramsey’s reduction of the Hall tax. “It’s obviously a question of balancing revenues, expenses. There are lots of things that people would like to add to the budget now. We have to get that balance right.”
Under the so-called Hall tax, the state currently taxes at 6 percent income from interest on bonds and notes and dividends from stock, although people over 65 with total income less than $16,200 and couples with less than $27,000 are exempt. Last year, lawmakers upped the exemption to $26,200 for individuals and $37,000 for couples, which will kick in for the 2012 tax year.
Two bills seeking to reduce the Hall tax have advanced to the Senate Finance committees, although their House counterparts have been put off until after the Legislature OKs the budget.
“We want to make sure that when you put money aside, when you pull out of your 401(k)s, it won’t be taxed,” Ramsey said after a milking contest in honor of Ag Day on the Hill Tuesday. “I don’t think we’ll ever get it completely done away with, but for those over 65, I think it’s very important.”
SB2535 would require the the state to adjust the Hall tax’s exemption annually to reflect increases in the consumer price index. SB2536 would increase the exemption to $36,000 for single filers and $47,000 for joint filers. Both exemptions apply to filers over 65.
Both bills are sponsored by Senate Government Operations Chairman Ken Yager, R-Harriman.
But Ramsey is still pushing for it. The bills have yet to be added to the committee’s calendar, but the lieutenant governor said he expects them to be heard next week.