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Ramsey Touts Accomplishments Under Republican-Controlled State Government

Statement by Lt. Gov. Ron Ramsey; May 18, 2012:

Dear Friend,

Earlier this month, the 107th General Assembly concluded its business.

My goals for this legislature were the same ones I had when first elected: give the people of Tennessee what they have asked for: more jobs, less spending and smaller government.

Now, with partners like Governor Bill Haslam and Speaker Beth Harwell, we have truly been moving the conservative ball forward. I have often said that it matters who governs. Over the past two years, we have proved why.

In our first year of unified Republican government, we put conservative principles into action by instituting landmark education reform, tax cuts and smaller government.

This year we again heeded the call of voters to make government smaller, more efficient and customer friendly. These are things I have championed throughout my career in the legislature.  But now, with a Republican Governor and Speaker of the House, we have become a transformational force for good government in Tennessee.

Representing the People

This General Assembly worked diligently and efficiently to get our work done on time – adjourning earlier than at any point in the last 14 years and using the least amount of legislative days since 1984.

This achievement not only saves considerable taxpayer dollars it restores the great virtues of our citizen legislature. To those who have only observed Tennessee politics for the last few decades it might appear the legislature got out “early” by adjourning in early May. This is a common misconception I intend to erase. We got out on time. Period.

Tennessee does not have a full-time legislature and, if I have anything to do with it, we never will. By allowing session to drag on into June or July year after year our Democrat predecessors succeeded only in creating more government and allowing the people’s representatives to get farther and farther away from their constituents. It is almost impossible to represent people with whom you are only tangentially connected or a community in which you only nominally reside.

Legislators should do the business the people ask of them in Nashville – and get back home. The cause of small, efficient and responsive government requires it.

Shrinking government and cutting taxes

This year, the state of Tennessee is budgeted to spend $31.1 billion – nearly $1 billion less than our current operating budget. These are real cuts, not the phantom cuts of Washington where removing anticipated increases in spending counts as a cut.

Tennessee budgeted conservatively this year. We worked with revenue that we actually had rather than “projected” revenue we “expected” to have. We balanced this budget much like you and your family balance your own. Unified Republican government did away with the gimmicky accounting of the past and relied on tangible revenue numbers.

Not only did we shrink government, we returned money to the taxpayers. We gave every Tennessean tax relief by again reducing the food tax – reductions previous Democrat regimes refused to make.

We also set a course for the ultimate elimination of the death tax – a tax that punishes small farmers and businessmen seeking to provide for the next generation.

Tennessee plunged a stake into the heart of this insidious tax that attacks the very essence of the American Dream. Unlike Washington, Tennessee plans for the future and encourages those in our citizenry to do likewise. I am proud that this General Assembly was the one that finally brought the death tax before the reaper.

Coupled with the elimination of the gift tax, this General Assembly cut taxes by more than $50 million this year, resulting in the release of capital and the creation of jobs.

Tennessee Republicans used to be limited in what we could do. Operating under a Democrat Governor and House Speaker, my office had to play defense against Big Government Democrats leaving across the board conservative governance as merely a dream for some future place and time. That place is here and that time is now.

Now, we have the numbers to enact our conservative principles. And with your help we will enlarge our majority so that no one stands in the way of true conservative government ever again.

Reforming State Government

One of our most transformative legislative achievements this session was the passage of Gov. Haslam’s TEAM Act. A revolutionary step in state government, the TEAM Act will help us attract, retain and promote the best applicants and employees in state government. Excellence will now be rewarded when it is achieved, just as it is in the private sector.

This year also marked the passage of our major unemployment insurance reform. Republicans heard the clamor and saw the need for legislation that results in job creation and we filled the void.

The Unemployment Accountability Act of 2012 strengthens the definition of employee misconduct to ensure that those who have been fired for cause no longer receive benefits. We instituted new work search requirements for unemployment beneficiaries, encouraging the use of existing state infrastructure to help return the unemployed to the job market.

Nothing cures both economic and social ills like a good job. Having a job doesn’t just fulfill a man or woman’s economic need but their spiritual need as well. It bestows upon them a sense of self-worth which permeates all aspects of life.

This reform will be a boon not only for job creators by protecting them from fraud and abuse – it also aids job seekers by pushing them towards the job market.

Another important piece of the Republican job creation package was our “loser pays” tort reform. Businesses don’t mind taking risks but they have to be calculated ones. “Loser pays” will free employers from the time and cash consuming drudgery of frivolous lawsuits and allow them to do what they do best: employ people.

The fight against addiction

This General Assembly has also taken on crime passing bills attacking domestic violence, criminal gangs and drugs.

Most important to me is the fight against synthetic drugs, which have become an epidemic in Northeast Tennessee. Many lives have been lost due to this scourge and I was proud to be part of the team fashioning a solution. Bills passed in this General Assembly banned chemical compounds used in illegal synthetic drugs, no matter how criminal chemists continue to modify them  Our new measure will keep the law ahead of the drug pushers.

We also began a program to drug test those receiving government assistance.  This will end the taxpayer subsidy of illegal drugs. We as a society are never going to prevent every motivated user from consuming drugs – but we certainly don’t have to pay for it.

This is why we constructed a constitutionally sound bill that will allow us to remove drug users from the welfare rolls while offering them help. This protects taxpayers and attacks addiction. It is a win-win for Tennessee.

Protecting citizenship

While we continue to implement our new Photo ID law protecting citizenship at the ballot box, we have taken further steps to protect the rights of citizens.

While I’m a conservative who believes in personal responsibly and limited government, we as a society do need to provide some sort of safety net.  However, that net must be for citizens only. That is why I aided passage this session of the Eligibility Verification Act.  It ensures that only those in the United States legally receive any taxpayer-funded benefit.

Again, this is common sense but it was left undone by our Democrat predecessors.

Tax cuts, smaller government and job creation – this is conservative government in action. It is what Tennesseans asked for and it is what Tennessee shall get as long as you allow me to serve as Lt. Governor.

I humbly appreciate the support of all Tennesseans as the legislature continues to work hard to make Tennessee the best state in the nation in which to live, work and raise a family.

Sincerely,

Ronald L. Ramsey

Lieutenant Governor

Speaker of the Senate

 

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Business and Economy Featured News Tax and Budget Transparency and Elections

Tax Cut Proposals Aplenty

Expect a tax cut, Tennessee’s high-ranking lawmakers are telling the public. In fact, expect as many as four.

Capitol Hill leaders are all but promising that Tennesseans should expect to pay less taxes on everything from their groceries to inherited multimillion-dollar estates.

“The important thing is we are sticking to the basic philosophy of our party, which is when additional revenue comes into the state, we look for ways to return it to the taxpayers instead of spending it,” said House Speaker Harwell, R-Nashville.

In past years under Gov. Phil Bredesen, a Democrat, lawmakers had considered raising taxes, such as by removing the local sales tax cap on high-priced items like boats and furs. With the GOP taking control of both chambers and the governor’s office last year, the Legislature reversed course and cut taxes by giving seniors a tax break on income from investments.

“It’s absolutely the right thing to do,” said Ben Cunningham, spokesman for Tennessee Tax Revolt, a fiscally conservative public advocacy group, and a persistent critic of heavy taxpayer burdens.

“During the good times, which is what it looks like we’re entering into now, we’re reducing taxes and expanding our economy and expanding our tax base in the future. And that’s the way to go,” he said.

In recovering from the recession that began in 2008, state revenues are now up 4.8 percent compared to a year ago, giving state officials the flexibility to decide how — or if — they’ll spend that unexpected taxpayer money. But Dick Williams of the left-leaning Tennesseans for Fair Taxation says the state should avoid rushing to reduce taxes without finding a way to offset the revenue, calling this year’s tax reform “low-hanging fruit for winning elections.”

“The whole concept of just lower taxes as low as you can ignores the fact we all rely on … roads and schools and services government provides,” said Williams, TFT chairman and an advocate for reducing the food tax in exchange for a broad-based income tax. “We just think it’s bad policy and shouldn’t be used as just a popular re-election or election tool.”

The proposed cuts enjoy varying levels of support from the two political camps and would touch all sorts of Tennesseans. Plans range from wiping away the tax on gifts like hand-me-down family cars or multimillion-dollar inheritances, reducing costs at the grocery store and giving seniors a break on taxes from earnings on stocks and bonds.

Tennessee Democrats say they’re generally in favor of cutting taxes, too, but would rather spread any tax breaks out to a larger audience by reducing the sales tax on food — even if the savings would appear small.

“As far as having an effect on people, it doesn’t have near the effect that a reduction in the sales tax on food would have, for instance,” said leading House Democrat Craig Fitzhugh, of Ripley.

Here are the four major tax cuts lawmakers are considering this year and a breakdown of how much taxpayers are currently dishing out to pay them:

“Inheritance Tax” SB3762/HB3760

This tax kicks in only when someone inherits wealth or a property worth more than $1 million. Any dollar over the $1 million threshold is taxed at progressive rates from 5.5 percent to 9.5 percent. Gov. Bill Haslam wants to gradually raise the exemption to $1.25 million beginning next year.

For example, coming into a property worth $1.04 million costs $2,200 in taxes. However, being left a property worth $5 million would cost $368,400 to inherit. Under Haslam’s plan, the $1.04 million property could be passed down tax-free next year, and the $5 million property would cost $344,650 in taxes.

Haslam and Republican lawmakers want to phase out this so-called “death tax” over the next four years, saying it hampers farm and business owners and forces some to relocate so their heirs can avoid paying the tax when they die. Democrats agree with deleting the tax in principle but say they’d rather see the state take a bigger bite out of the tax on food.

Inheritance Tax Stats:

  • In fiscal year 2011, people paid $97,875,967 in inheritance taxes.
  • In 2010, people paid: $75,887,698 in inheritance taxes.
  • That’s a 28.9% increase in the last year.
  • Reducing the tax next year will mean $14.1 million less for state government.

“Grocery Tax” SB3763/HB3761

While most other products in Tennessee carry a 7 percent state tax, non-restaurant food is taxed at 5.5 percent. The tax doesn’t apply to all groceries, like diapers or garbage bags, but only food products like meat, vegetables and bread.

Haslam wants to reduce the tax to 5.3 percent in hopes to drop it to 5 percent in three years. However, there is so far no legislation that would require the state to follow the governor’s timeline.

A family of four buying $884 a month in groceries would save $21.22 in the first year under Haslam’s proposal. Dropping the tax to 5 percent would mean that family would save $53.04 annually, and eliminating it completely would translate to $583.44 in savings a year.

Both parties are on board with this tax cut, although Democrats and some Republicans want to take a larger slice out of the tax. Some want to drop it to 5 percent next year and others want to get rid of it all together.

Food Tax Stats:

  • In fiscal year 2011, people paid $489,939,858 in taxes on non-restaurant food.
  • In 2010, people paid $476,875,314 in taxes on non-restaurant food.
  • That’s a 2.7 percent increase in the last year.
  • Reducing the tax next year to 5.3 percent would mean $17.1 million less for state government to spend.

“Gift Tax,” SB2777/HB2840

This is the newest tax cut on the block this session. This bill would repeal the state’s current 5.5 percent to 16 percent tax on gifts to individuals, like cars, boats and real estate.

The tax rate and an exemption depend on the value of the gift and who it’s given to.

For example, a father can give his daughter his old Volkswagon, and she won’t have to pay the gift tax on it unless it’s worth more than $13,000. If it is worth, say $20,000, she’d have to pay $385 in taxes. If the father gave a car to his friend’s unrelated goddaughter and it’s worth more than $3,000, she’d get stuck paying the tax. That same $20,000 car would cost her $1,105 in taxes.

Harwell added this repeal to the list of priority tax cuts earlier this month, saying it would round out the types of taxes the state should no longer impose. The governor said lawmakers have approached him about doing away with this tax, and he’s working to see whether the state can afford it.

“Gift Tax” Stats:

  • In fiscal year 2011, people paid $15,472,738 in gift taxes.
  • In 2010, people paid $11,448,443 in gift taxes.
  • That’s a 35.2 percent increase in the last year.
  • Reducing the tax next year would mean $14.9 million less for state government.

“Hall Tax,” SB2535/B3423 and SB2536/HB2972

Named after its creator Sen. Frank Hall, who pushed the bill in the late 1920s, this tax focuses on income from interest on bonds and notes and dividends from stock. That interest is taxed at 6 percent, but lower income people over 65 are exempt.

For 2011 income and the tax filing coming up next month, individuals over 65 with total income less than $16,200 and couples making less than $27,000 last year are exempt.

For 2012, the senior citizen exemptions are higher, at $26,200 for individuals or $37,000 for couples.

Lt. Gov. Ron Ramsey was behind the expanded exemption and says he wants to go further this year, although Harwell and Haslam aren’t so sure. The governor said he’s still trying to figure out what the state can afford to do.

Ramsey wants to either up the exemption by $1,000 for both single filers and couples or require that the exemption keep pace with the rate of inflation.

“Hall Tax” Stats:

  • In fiscal year 2011, people paid $189,518,032 in Hall taxes.
  • In 2010, people paid 172,459,343 in Hall taxes.
  • That’s a 9.9 percent increase in the last year.
  • Increasing the exemption by $1,000 under SB2536 would mean $88 million less in state government.
  • Increasing the exemption to keep up with inflation under SB2536 would mean $1 million less in state government.
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Environment and Natural Resources News NewsTracker Tax and Budget

State Gift-Tax Cut Weighed Against Other Requests

Gov. Bill Haslam says he’s considering the idea of cutting or eliminating the tax on large gifts, which has “been brought up by several legislators.” But the governor said he won’t know until April whether the state can afford it.

Knocking down the gift tax is the newest addition to a handful of tax cuts Republican leaders say they want to see this year.

“We’ve heard a lot of folks saying they would like that addressed,” Haslam told reporters after speaking to the Nashville  Area Chamber of Commerce in downtown Nashville Tuesday.

“We have a whole lot of requests for budget amendments. Way, way more than we can ever fund, and so we’re trying to wade through that and prioritize amongst a lot of different areas of interest,” he said.

People now pay a 5.5 percent to 16 percent state tax on pricey gifts such as a car, land or wealth.

The tax applies for gifts worth $13,000 within the family or gifts of more than $3,000 to others.

Last budget year, the state collected more than $296,000 in gift taxes, a 9 percent increase over the year before, according to the Department of Revenue.

Eliminating the gift tax is as important as the governor’s preferred tax cuts on food and inheritances, said House Speaker Beth Harwell.

Senate Speaker Ron Ramsey says he’ll back a reduction in the gift tax, but he’s also pushing for a reduction in the tax on income from stocks and dividends although Harwell and Haslam say that tax is not among their priorities.

“We actually don’t have anything on the Hall this year,” Haslam said. “We did last year. There’s nothing on the Hall this year.”

Categories
Business and Economy Featured News Tax and Budget

Another Round of ‘Hall Tax’ Reductions Unlikely This Year, says House Speaker Harwell

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.