Senator Brian Kelsey emails that he has filed two bills for the 2015 legislative session beginning in January. “Senate Bill 2 will repeal the Hall tax on interest and dividends. Senate Bill 1 will enact the Founding Fathers method of selecting appellate judges in Tennessee.”
It was an interesting juxtaposition after Senator Mark Norris had addressed the Midtown Republican Club on Tuesday and indicated he was not pleased with the proposal to repeal the Hall tax. While not mentioning Senator Kelsey by name, he mentioned that the same person who had been behind amendment 3 immediately filed this bill. He pooh poohed it, saying why not repeal the sales tax if you were so eager to cut taxes. Norris said he had misgivings about replacing the funds lost if the Hall tax is repealed.
This move is really not unexpected, however. When Senator Kelsey addressed our club earlier this fall, he told us that once amendment 3 passed, he would proceed with a repeal of the Hall tax. He said he did not consider it fair that retirees who depend on income from interest and dividends should be punished by this 6% tax. “This tax on investment and savings falls disproportionately on older Tennesseans, and it discourages savings and investment, which are the building blocks for a strong economy. Senate Bill 2 will phase out the Hall tax over 3 years. I am committed to ending this tax by the end of my four-year term,” he writes.
He may encounter some blowback. The Tennessean reported:
The tax isn’t popular among Republicans, who have a supermajority in both chambers of the state legislature. Gov. Bill Haslam recently renewed his opposition to doing away with the tax. He said he doesn’t like the tax either, but it’s not feasible to repeal it considering current budget restraints.
“The reality is, if you look at the budget pressure that we have, if you look at the revenue and the breadth of revenue that we have to draw off of, for now, I don’t see a way to do it,” Haslam told reporters in late October.
“I don’t think it’s a good tax, but I can’t take $270 million out of our budget without something that I know will replace it.”
Kelsey’s proposal would gradually repeal the tax, rolling it back 2 percent for three years so that it is eliminated by 2018.
“My hope is that the state revenues will continue to increase enough that we will not have to cut to eliminate the Hall tax,” Kelsey said Friday afternoon. He said he’s confident that is a realistic expectation of growth, looking at growth in revenue during the past three years. But the state can re-evaluate those prospects in the spring, he said.
“I think most legislators would like to eliminate the Hall tax. The only real question is: What’s the best way to do it in a responsible fashion?” Kelsey said.
Last session a House bill proposed cutting the tax 1 percent per year starting in 2017 if state revenues maintained consistent growth. A different proposal from the Senate would’ve cut the state’s portion of the tax but left in place a 2.25 percent levy that would still go to local governments.
Personally, I think that cutting this tax would be a good thing. I think Kelsey is right that the elderly are hurt by this. And, whenever taxes can be cut, they should be. We have too many silly projects that eat away at funds. Not only is this wasteful, but it also provides an opportunity for politicians to funnel money to people and projects that voters have very little say in.
The second bill Kelsey proposes he calls the Founding Fathers Plus Plan. He applauds passage of Amendment 2 and says it “resolved our constitutional crisis concerning how we select judges in Tennessee by borrowing from the wisdom of our Founding Fathers. Senate Bill 1 will now lay out the specific process by which judges will be appointed by the governor, confirmed by the legislature, and retained or replaced by the people. It uses the time-tested principle of checks and balances to increase transparency and accountability in the process of choosing appellate judges.”
We’ll have to see how this is received by the adamant opponents of Amendment 2.