Most local government officials oppose repeal of the state’s Hall tax on stock dividends and interest, reports Richard Locker in a story that includes some new figures on money collected and distributed through the tax — much of it to local governments.
During the fiscal year that ended June 30, the income tax generated $303 million in total revenue, with about $189 million flowing to the state’s general fund and the remaining $114 million distributed to local governments across the state.
State Sen. Brian Kelsey, R-Germantown, said last week he will try again in 2016 to abolish the tax, effective with the 2017 calendar year. Kelsey said the legislature should reimburse cities and counties for their revenue loss but neither the bill nor an amendment he filed last week provides for continuing the revenue stream to local governments.
Memphis is the largest single recipient of Hall tax proceeds — $14.8 million during fiscal year 2015, according to new figures from the state Department of Revenue. Nashville is second at $14.6 million, followed by Knoxville with $10 million. Knox County is seventh with $3.3 million, followed by Germantown with nearly $3.1 million.
…Kelsey said last week that the Hall tax “especially hurts our seniors and those who have saved for their retirement, as almost half of those who pay the tax are 65 or older. Not only that, nearly 9 of 10 individuals who pay the tax have less than $34,000 per year in investment income.”
According to statistics from the Revenue Department, 45 percent of the individuals who filed Hall tax returns in 2013, the last year for which complete figures are available, were over age 65. But that percentage may decrease due to higher overall income thresholds the legislature has enacted for people 65 and older to be subject to the tax.
For tax year 2015, taxpayers 65 and up are exempt from the Hall tax if their total income from all sources is $68,000 or less for joint filers and $37,000 or less for single filers, under legislation sponsored by Sen. Doug Overbey (R-Maryville) and Rep. Charles Sargent (R-Franklin) and signed into law by Gov. Bill Haslam in April. That’s up from $59,000 and $33,000 in tax year 2013, and from the $27,000 and $16,200 income thresholds in tax year 2000.
In addition, the first $1,250 in taxable dividend and interest earnings for single filers and the first $2,500 for joint filers is tax exempt. The state tax levies a 6 percent rate on taxable dividends and interest, but exempts interest earned on savings accounts, certificates of deposit, government bonds, credit unions, bank money market accounts and dividends from bank stock, insurance companies, credit unions and other sources.
The Revenue Department says just over 89 percent of the 166,723 Hall tax returns filed for tax year 2013 had Hall tax liability of $2,000 or less and another 6 percent had Hall tax liability of $2,000 to $3,999.
Note: The link in this post is to the Commercial Appeal story. Locker had a separate version, with more emphasis on Knoxville area, in the News Sentinel HERE.