Gov. Bill Haslam stopped off Tuesday for a ceremonial tax-relief bill-signing before an appreciative audience of senior citizens at a retirement community on the Cumberland Plateau.
About 80 retirees turned out at the Fairfield Glade conference center near Crossville to applaud the governor and the state Legislature for expanding the senior-citizen exemption in the so-called Hall tax.
Named after the state senator who sponsored the legislation when it first passed in 1929, the Hall tax is a levy on stock earnings and investment income.
For the third straight year, the Tennessee General Assembly has raised the income-level at which those over 65 have to start paying it. Now, single filers with an income of less than $33,000 and to joint filers with at least one spouse at least 65 years old with an income of less than $59,000 are exempt. Previously, only those retirement-age single filers with an income of less than $26,200 and joint filers making $37,000 were exempt.
The governor said the Hall tax cut and others he’s signed since taking office — like eliminating the gift tax and phasing out the estate tax — are part of an “overall strategy of reducing taxes” in general.
Haslam said he’s specifically aiming to “reduce the tax burden on seniors” in order to help attract retirees to Tennessee.
“We want this to be a place where people choose to live,” Haslam said. “We like that there are a whole lot of people in Tennessee that we call ‘halfbacks.’ They move from Ohio or Wisconsin or somewhere to Florida, then they say, ‘That’s not quite it,’ and move halfway back home. They come to Tennessee and we love having them here.”
Many move here because there’s no state income tax in Tennessee, “and that’s really a good thing,” said Haslam. But taxing investment earnings has a particular sting for many retirees, he said.
“If you’re a senior and you’ve moved here from somewhere else, and maybe you’re living off income based on interest and dividends, then you feel the pressure of that,” the governor said.
Since the Tennessee General Assembly shut down last month, Haslam and legislative Republicans have been expressing satisfaction with themselves for cutting taxes, putting revenues in the state’s rainy day fund and passing a $32.8 billion budget, balanced in accordance with the state’s constitution.
Democrats, however, think more could’ve been done for the poor than the quarter-cent cut to the state’s grocery tax enacted again this year.
As they’ve steadily watched their numbers dwindle in the Legislature over the past several years, Democrats have become more and more vocal in their advocacy of doing away with the state’s sales tax on food. And while Haslam and Republicans have cut the tax from 5.5 percent to 5 percent, Democrats complain that it hasn’t been enough.
“We could afford to do away with the sales tax on food if we would quit cutting these other taxes,” said Senate Minority Leader Jim Kyle, D-Memphis.
Haslam has countered that that under his leadership, the grocery tax has fallen by 10 percent in the last two years. “We’re making headway on that for the first time,” he said.