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.