House GOP picks an unusual bargaining chip in budget debate: Retaining the Hall income tax

Speaker Cameron Sexton (R-Crossville) presides over a House floor session on June 1, 2020. (Erik Schelzig, Tennessee Journal)

For years, the contest among legislative Republicans was over who could move to eliminate the state’s Hall Income Tax the quickest. Now it appears House Republicans want to hold on to the last vestige of the tax on earnings from stocks and bonds for another five years.

The Daily Memphian‘s Sam Stockard reports the House plan would keep the 1% tax on the books until 2025, pulling in about $49 million per year as the state scrambles to make up for revenues lost during the coronavirus pandemic.

The Senate wants to keep the levy on it’s current path toward expiration on Jan. 1.

Look no further than House Speaker Cameron Sexton (R-Crossville) to illustrate the political importance of doing away with the Hall tax. As Sexton told the told the Crossville-Cumberland County Chamber of Commerce in 2011. ”

We don’t want to be a state that penalizes people for investments or for saving … It’s also bad policy. We shouldn’t penalize people for saving for the future.

Will Sexton really want to have to explain to constituents — a large portion of whom are retirees — why his first session as House speaker included a resurrection of the hated Hall tax? Probably not. Many political observers see the Hall tax item as a bluff by the House to try to negotiate concessions out of the Senate.

The question is whether House Republicans are really just negotiating with themselves.