Senator drops plan to repeal Tennessee investment tax

The Senate sponsor of a bill to repeal Tennessee's tax on stocks and bonds withdrew the measure Wednesday after differing with other lawmakers over the plan.

State Sen. Mark Green, R-Clarksville, pulled his proposal to phase out the Hall tax on investment income, putting an end to debate on the issue for the year. The move came when the Senate Finance Committee amended the bill to phase it out completely over the next decade. Green had planned to cut the state's portion of the tax but leave in place a 2.25 percent levy that goes to local government.

"I promised my communities that I wasn't going to let that happen, that I would protect their revenue," Green said.

Cutting the Hall income tax has received a big push this year, particularly from right-leaning organizations such as Americans for Prosperity and Americans for Tax Reform. Opponents of the tax say it discourages wealthy individuals from moving to Tennessee and disproportionately affects senior citizens.

But it has been opposed by Gov. Bill Haslam, who says the state cannot afford to cut it this year. He also has pointed out that, under current law, seniors must pay the tax only if they earn more than $33,000 from all income sources individually or less than $59,000 as couples.

The impact on local governments, especially wealthy communities with large numbers of investors living in them, long has been a stumbling block to cutting the Hall income tax. But Finance Committee Chairman Sen. Randy McNally, R-Oak Ridge, said the amendment proposed Wednesday was not meant to sink the bill.

"I think if Tennessee wants to say it's a no-income-tax state, which we do, we need to get rid of the income tax," he said.

Reach Chas Sisk at 615-259-8283 and on Twitter @chassisk.