The Tennessee Legislature won’t pass much in the way of tax cuts beyond what Gov. Bill Haslam is requesting for 2012, says House Speaker Beth Harwell.
That means a reduction in the Hall tax on income from stocks and dividends — a tax Lt. Gov. Ron Ramsey wants to see slashed this session — isn’t likely in the cards, she said.
“I do not think so this year,” Harwell said Thursday when asked if the Hall tax will make it to a floor vote. “We did, of course, take a bite out of that last year. But I think our focus now is going to be on the reduction of the death tax, elimination of the gift tax and a reduction of the food tax.”
Lawmakers have yet to take up a bundle of bills reducing taxes on Tennesseans as lawmakers push those measures toward the end of the spring legislative session, likely after lawmakers have a clearer picture of the state’s budget.
Although reducing the Hall tax on interest and dividends isn’t in the Haslam-Harwell playbook this year, it’s still a priority to Ramsey, according to the lieutenant governor’s spokesman, Adam Kleinheider.
The tax currently charges 6 percent on income from interest on bonds and notes and dividends from stock, although people over 65 with total income less than $16,200 or a couple 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.
One of Haslam’s prime objectives this year is to reduce the food tax from 5.5 percent to 5.3 percent. The move is part of a larger plan to drop the tax on non-restaurant food to 5 percent over three years.
He also wants to increase the exemption on the inheritances tax, otherwise known as the “death tax.” His plan is to raise the exemption from $1 million to $1.25 million to lower the tax burden on family business owners in hopes of eventually raising the exemption to $5 million.
Lawmakers from both parties have signaled they’d like to go further than Haslam by reducing the food tax and inheritance tax even more or completely eliminating them.
Another tax-cut idea that’s been suggested is to do away with the “Gift Tax,” which charges 5.5 percent to 16 percent tax on transfers of wealth or property amounting to more than $13,000 to family members and $3,000 to non-family. Harwell said the GOP plan is to eliminate that tax.