Justin Wilson, state of Tennessee’s comptroller, spoke Tuesday before the Senate Finance, Ways and Means Committee about Republican-led efforts to cut the state’s tax on interest from bonds, notes, and stock dividends.
A bill in the Legislature would start a trajectory of drastically reducing the Hall tax, and ultimately eliminating any state budget reliance on it and leaving only a fraction in place to fund local governments.
Wilson discussed the history and implications of cutting the Hall income tax on the state’s bond rating and budget, which has is pinched at the moment because state revenue collections are lower than what lawmakers anticipated.
“It was created in 1925 by Frank hall from Dickson, and it was constitutionally justified as a property tax. It is really a crude wealth tax,” said Wilson. “What I believe is that it is in the long term economic benefit of the state to abolish the Hall tax. I absolutely believe that, although there’s real timing issues involved.”
Wilson said he “hates” the Hall tax as much as any of its other vocal opponents. He said the tax creates a “disincentive for retirees to live in Tennessee.” Senior citizens are good for Tennessee, Wilson suggested, because they don’t cost as much to manage for the government as younger populations.
“The people who would be affected are those who don’t get drunk on Saturday night and have to go to jail, or who go into the hospital for emergency (uncompensated) care, or don’t have a lot of children in school. They add to our tax base. Also, they bring in pension funds from all the states into Tennessee, and federal transfer payments. So I think it is very positive to eliminate the Hall’s income tax.”
According to the Haslam administration’s Hall tax information page, “seniors are far more likely to own stocks that pay dividends than other demographic groups, and many retirees rely on stock dividends for their income.” But while the governor has supported bigger Hall tax exemptions in the past, he’s hesitant to sign on phasing it out altogether in the current budget climate.
As the Legislature enters its final hours, it’s still an open question as to whether or not lawmakers will push for greater Hall tax relief.