Knox County seniors, who pay more Hall Income Tax than any other county in the state, may get a substantial tax break this legislative session.
Gov. Bill Haslam was initially reluctant to cut taxes given the state of the state's economy and the fragility of the state budget. But he signed on to the idea of cutting the inheritance tax, phasing it in over a period of years. Any estate under $5 million would be exempt from the tax.
Haslam included the plan in the budget he sent to the Legislature, but he flagged his Republican colleagues' request to also abolish the Hall Income Tax. But the House Republicans, given that it is an election year, are still enthused about cutting taxes. There may be an effort to find cuts to offset the lost revenue from the Hall tax, (a tax on investment income that hits mostly the elderly).
The revenue from the Hall tax varies wildly, depending on disbursements from mutual funds. Local governments get three-eighths of the tax which goes to the county where the taxpayer lives. Knox County has received up to $12 million from the tax, the most of any county in the state. The state portion of the tax can range from $180 million to $200 million. It represents 2 percent of state revenues.
The tax dates from 1929 and is named for state Sen. Frank Hall, who sponsored it.