Posts Tagged ‘taxes’
NASHVILLE – The Beacon Center of Tennessee today joined with other tax reform groups and legislators in support of phasing out the Hall Income Tax on stocks and bonds. House Finance Chairman Charles Sargent, Sen. Mark Green, Americans for Prosperity’s Tim Phillips, Americans for Tax Reform’s Grover Norquist, Tax Foundation’s Scott Hodge, and Beacon CEO Justin Owen unveiled a plan this morning to phase out the state tax.
The Hall Income Tax imposes a levy on income derived from stocks and bonds. It hits seniors and entrepeneurs the hardest, as both groups rely more heavily on this type of income than others. Beacon has featured the story of a retired couple who moved to Tennessee only to discover our state’s “income tax secret,” as well as the story of a young entreprenuer whose business decisions are negatively impacted by the tax. The stories can be found in Beacon’s new report, “Our State, Our Future,” linked here.
“It’s time for Tennessee to end this tax that overly burdens our seniors and job creators,” says Beacon CEO Justin Owen. “It drives investors out of our state and puts undue pressure on our retirees.”
Sen. Mark Green and Rep. Charles Sargent will spearhead the legislation, which will phase out the state portion of the tax over a period of six years. The measure also includes provisions to ensure that the phase out is done in a fiscally responsible manner.
“We are grateful that Sen. Green and Chairman Sargent have made this such a top priority,” continued Owen. “And to have national leaders like Grover Norquist, Tim Phillips, and Scott Hodge lend their expertise to the effort makes this a great day for Tennessee.”
The Beacon Center of Tennessee’s mission is to change lives through public policy by advancing the principles of free markets, individual liberty, and limited government.
###March 4th, 2014 | Recent News
In an effort to raise awareness about Tennessee’s income tax secret, Beacon Director of Policy Lindsay Boyd pens an article that originally appeared in Saturday’s Tennessean.
by Lindsay Boyd
As the 2014 legislative session of the Tennessee General Assembly gets into full swing, there are several issues that are dominating the headlines. Wine in grocery stores, opportunity scholarships for students, Medicaid expansion and a host of other subjects have become kitchen table conversations for Tennessee families.
Amid these timely topics is a sleeper issue that many may be unaware of — but one that drives straight to the heart of Tennessee’s reputation, culture and values.
If you have not familiarized yourself with the Hall Income Tax, perhaps it’s time to ask yourself this important question: Are you secure in your plans for the future? If you believe that you’re taking all the proper precautions to sustain yourself or your family for the years ahead, the impact of Tennessee’s Hall Income Tax may be reason to reconsider.
The Hall Income Tax was instituted in 1929 and applies to interest and dividend income received by individuals who maintain their legal residence in Tennessee. The controversy over this tax may not get the same coverage as the ability to buy a bottle of wine with your groceries, but the impact of the Hall tax is much more substantial. In the Beacon Center of Tennessee’s newly released report “Our State, Our Future,” the harmful effects of the tax are illuminated through the stories of Jon and Linda Freeman, a retired couple, and Nicholas Holland, a young Nashville entrepreneur.
Had Jon and Linda known about the tax before moving from Alabama, they may have looked elsewhere to retire.
“I wish these harsh taxes had been more clear to us before we came here,” Jon Freeman says.
Holland similarly asserts, “The Hall tax is not only an income tax, but an income tax of the worst kind: It punitively punishes a segment of our population, namely the elderly, who have taken risks with their hard-earned dollars and hope to see their risks pay off.”
Indeed, consequences of the Hall Income Tax loom large. Several studies suggest that a dividend becomes less valuable when more of it is taxed. Moreover, the tax encourages more people to sell stocks rather than begin to draw income from the investments, which impacts the financial planning of investors and has negative economic consequences for companies.
Yet, perhaps the most compelling argument against the tax is the destruction it causes to the lives of our senior citizens, who own a disproportionate percentage of dividend-paying stocks and are reduced to significantly smaller incomes as a result.
“My father recently passed away, and my mother — who would be considered very middle class — received some financial assistance through my father’s insurance,” Holland says. “We have discussed placing those funds into stocks that would give her a fixed income necessary for her retirement. However, the Hall tax makes this an unlikely option for us. Lawmakers should remember that seniors are among the most vulnerable of our population and the impact this tax has is not just limited to those individuals, but also to their families, who face the burden of assisting or providing for their loved ones,” he notes.
The Hall tax will be addressed by the General Assembly this spring, with several proposals already introduced that take varying approaches toward reducing or eliminating the tax altogether. It remains to be seen whether lawmakers will finally end this antiquated tax law from a bygone era.
Lindsay Boyd is the director of policy at the Beacon Center of Tennessee, and co-author of “Our State, Our Future.”February 23rd, 2014 | Commentary
NASHVILLE – The Beacon Center of Tennessee today released “Our State, Our Future,” a publication in the Faces of Freedom series that focuses on the harmful impact Tennessee’s investment income tax has on the lives of Tennesseans. The Hall Income Tax empowers the Tennessee General Assembly to “levy a tax on incomes derived from stocks and bonds.” For Tennessee residents, this is a punitive tax that penalizes sound financial planning, subjects individuals to double taxation, hamstrings retirees, and is a blight upon a state that’s built a reputation as an income tax-free haven.
“We made sure to save throughout our careers…we were never so ‘well-to-do’ that we didn’t have to be concerned about our future, or our children’s futures,” explains Jon and Linda Freeman—a retiree couple from Coldwater featured in “Our State, Our Future.” Jon and Linda made responsible choices with their finances in the hopes of securing a sustainable retirement, but were unaware of the Hall Income Tax when they made the decision to relocate to Tennessee from Alabama. Now, the couple struggles with the six percent tax on their total fixed yearly income since the Hall Income Tax is not marginal—meaning that earning just one dollar above the $59,000 exemption level means their entire income is subjected to the hefty tax.
Nicholas Holland, also featured in “Our State, Our Future,” is a young entrepreneur from Nashville who also faces the harsh reality of Tennessee’s income tax secret. Nicholas is now reluctant to draw income from his investments that would allow him to grow and expand his business. “The Hall Income Tax is…an income tax of the worst kind: it punitively punishes a segment of our population, namely the elderly, who have taken risks…and hope to see their risks pay off,” Holland asserts.
The Beacon Center believes that the time has come to end this antiquated tax law and invite more people like Nicholas and the Freemans to make Tennessee their home. “Eliminating the Hall Income Tax would mean a sacrifice of less than two percent of Tennessee’s total annual revenue, but would have a significant impact on the lives of Tennesseans who depend upon their frugal investments to sustain them in the years ahead,” suggests Lindsay Boyd, Policy Director at the Beacon Center and author of the new report. “By taking this simple step, our legislators can encourage entrepreneurial and economic growth by attracting more small businessmen and families to the state, effectively cementing Tennessee’s claim as one of the tax-friendliest states in the nation.”
See the full Faces of Freedom publication, “Our State, Our Future” here.
The Beacon Center of Tennessee’s mission is to change lives through public policy by advancing the principles of free markets, individual liberty, and limited government. The Center is an independent, nonprofit, and nonpartisan research and public policy organization dedicated to providing timely solutions to public policy issues in Tennessee.
Faces of Freedom is a Beacon Center series to educate Tennesseans about the barriers to prosperity brought about by poor public policy. By providing real-life stories of real-life citizens, Tennesseans can better understand the impact public policy has on their lives.
###February 4th, 2014 | Feature, Policy