Tennessee: The Asterisk State—An Excerpt from “Modern Davids”


March 14, 2024 10:51AM

In celebration of Beacon’s 20th Anniversary, Beacon President and CEO Justin Owen wrote a book called Modern Davids: Celebrating 20 Years with 20 Stories of Everyday Tennesseans Fighting Big Government. We will be sharing an excerpt from the book each month to tell you more about our heroes. The book is out now! You can secure your copy by clicking here.

Jon and Linda Freeman have been married for more than forty years. After meeting through their work at Boeing in Colorado, the young couple relocated to Alabama in 1965 with dreams of starting a family. Jon began planning for their retirement early, and Linda even enrolled in a “women in investing” course during a time when women were rarely active in this role. Both have long been committed to building a sound future for their growing family.

In 2007, Jon and Linda decided to retire so they could spend more time with loved ones and enjoy the mountains around their favorite alcove of Coldwater, nestled in the Tennessee hills. “It’s beautiful. We love the outdoors,” reflects Linda. “Huntsville was getting too big, with too much traffic. We wanted to get back to land yet stay close enough to Huntsville to still go to church there and see friends. But this is home now.”

As much as Jon and Linda have relished their sunset years in Tennessee, they were met with a surprising and alarming tax that had become a harsh reality for hundreds of thousands of retirees like them: the Hall Income Tax on investment income, enacted in 1929.

Since retiring, Jon and Linda have largely relied upon their income from investments to support their cost of living. Unfortunately, the Hall Tax ate into their savings and punished their frugality. It also tarnished Tennessee’s claims of being income tax free, leading many tax experts to call Tennessee the “Asterisk State” because its tax friendly status was frequently qualified with an asterisk.

Because Jon and Linda are middle-class, much of their retirement income was subject to the tax. “We very carefully planned our retirement,” says Jon. “We were never so ‘well-to-do’ that we didn’t have to be concerned about our future, or our children’s futures.”

So was the case with many Tennessee seniors just trying to maintain a quality lifestyle and provide for their families. Until Beacon made this our top priority in 2016.

That year, Beacon set its sights on making Tennessee truly income tax-free by repealing the Hall Tax. We conducted our largest ever public awareness campaign, educating Tennesseans on why the Hall Tax was harmful to seniors like Jon and Linda, deterred economic growth in our state, and was just plain wrong. As we concluded all our ads, this “is not the Tennessee Way.”

We started by educating Tennesseans about the impact of the Hall Tax, primarily through a catchy, 30-second video, which compared Tennessee to Florida in a football-themed format. Want to get a southerner’s attention? Talk about football.

The video garnered over four million total impressions in a state of just under seven million people. The video drove viewers to our website, where we further educated Tennesseans on the issue and asked them to sign a petition in support of repealing the tax. The website drew thousands of visitors and petition signatures over the course of just six weeks.

With our support base growing, Beacon then engaged those Tennesseans. Those who signed our petition generated nearly 80,000 emails to legislators and the governor in support of repeal.

And it worked. On the final day of the 2016 legislative session, lawmakers voted to repeal the Hall Tax.

Jon and Linda remain engaged in Beacon’s work to this day. Thanks to their willingness to speak out about their challenges with the Hall Tax, they helped return more than $300 million a year to taxpayers and make Tennessee truly income tax-free for the first time in nearly a century.