- Associated Press - Friday, April 22, 2016

NASHVILLE, Tenn. (AP) - The Tennessee Legislature on Friday passed a measure that would reduce and eventually eliminate the Hall tax on investment income.

The Hall tax imposes a general levy of 6 percent on investment income, with some exceptions. Lawmakers agreed to reduce it down to 5 percent before eliminating it completely. They intend to pass future legislation reducing it by 1% each year before eliminating it completely by 2022.

Sen. Mark Green, R-Clarksville, who sponsored the legislation, called it a historic vote leading to the end of the tax. “This is the beginning of the end,” Green said. Sen. Brian Kelsey, R-Germantown, agreed, calling it a bad tax and said almost half of the people who pay the tax are age 65 or older.

But Democratic Rep. G.A. Hardaway of Memphis said he could not support the measure because his district stood to lose money.

Rep. Charles Sargent, the Franklin Republican who sponsored the House bill, said the state would lose $27 million to $28 million and local governments would lose about $14 million in the first year.

Senate Majority Leader Mark Norris, R-Collierville, said lawmakers decided to wind down the tax to give local governments a chance to adjust to it. He also said he expected more growth in the state as a result of the elimination of the tax.

Gov. Bill Haslam has previously raised concerns about the loss of revenue but said after the legislature adjourned that lawmakers made the decision to eliminate it.

“But as for me, I liked it the way we had it before,” the governor said. He would not say whether he would veto the legislation.

Also on Friday, lawmakers passed a bill that would give total or partial property tax relief to disabled veterans and low-income elderly. Some Democrats said it didn’t go far enough, but Republicans accused them of grandstanding on the issue and said there had only been a little less than $1 million budgeted for it.


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