Republican Governor Bill Haslam has signed a bill into law that will phase out the state's Hall tax on earnings from stocks and bonds.
The law reduced the tax by 1 percentage point in the first year and then requires future reductions to eliminate the tax altogether by 2022.
Haslam signed the bill Friday despite his administration's earlier concerns about the measure for requiring the future cuts regardless of how the state's economy performs.
The initial cut amounted to a 17 percent reduction for Hall tax payers. The change has been projected to cause a loss of $28 million in state revenues, plus another $15 million from the communities where the tax is collected.
Some mayors of have warned they will have to try to make up the revenues elsewhere.
Friday afternoon, Governor Haslam released the following statement through Press Secretary Jennifer Donnals:
"The governor has long stated his wish to repeal the Hall Income tax. It penalizes saving and investing, and because it is concentrated on a small number of people coming or going from Tennessee, there can be significant shifts in revenue, making it undependable. He is concerned, however, with the approach taken to reduce and eliminate it. It is a small piece of a much larger puzzle we have tried to manage effectively and efficiently in state government. He often compares governing to a relay race, and he will hand off the baton to the next governor. As we move forward with this plan at this time, there will be more difficult decisions to be made. The state will not always have revenues like we had this year. The governor expects the legislators, advocacy groups and other stakeholders who have supported the automatic repeal of the Hall Tax to be equally strident in their support of this administration’s efforts to find the efficiencies needed to meet the aggressive timetable set forth in this legislation."
