Repeal of Hall Tax will bolster Tennessee's economy

• There is overwhelming bipartisan support to repeal a tax that, among many things, punishes savings and investing.
• The revenue raised by the Hall Tax makes up less than 1 percent of the total state budget.
• Reducing taxes and creating a business-friendly environment is the best way to expand the state's revenue base.

Here’s the most significant thing you need to know about the Tennessee legislature’s decision to repeal the Hall Income Tax: More than half of the people who are paying this punitive tax make less than $75,000 a year. In other words, it’s not just the rich.

This matters because now that the bill to repeal a 6 percent tax on income derived from stocks and bonds is over to the governor’s desk for consideration, it is absolutely important that we remember that those paying for the Hall Tax include retirees, hardworking families and budding entrepreneurs who all call the Volunteer State home.

Thanks to the leadership of Sen. Mark Green, R-Clarksville, and Rep. Charles Sargent, R- Franklin, the Tennessee legislature took an important step to reduce the tax burden on Tennessee taxpayers. What’s more, as the final vote tally made clear, there is overwhelming bipartisan support to repeal a tax that, among many things, punishes savings and investing. And along the way, supporters wanting to eliminate the Hall Tax cleared up misconceptions and misinformation about taxes and the best way to collect revenue.

As the executive director of Latinos for Tennessee, a nonprofit committed to promoting fiscal responsibility to the Latino community, I was particularly grateful for groups like the Beacon Center of Tennessee that provided an important service in educating Tennessee lawmakers and their staff on why repealing the Hall Tax is absolutely vital in order to ensure that our state remains competitive and attracts more high-paying jobs. Many of our members are immigrants, or the sons and daughters of immigrants, who fled countries with incredible rates of taxation that drove businesses into the ground.

Among the biggest misconceptions out there is the idea that the revenue raised by the Hall Tax makes up a significant chunk of the state’s budget. This is an important question and one worthy of consideration. But as the good folks at the Beacon Center pointed out, the revenue raised by the Hall Tax makes up less than 1 percent of the total state budget.

Even so, the language of the final version of the bill will phase out the Hall Tax over a six-year period in order to ensure that there is a fiscally responsible transition from a system that has been in place since the days of Prohibition. This compromise reflects a spirit of cooperation and bipartisanship from our state’s elected officials.

There’s a bigger point about the recent Hall Tax discussion that’s instructive. In short, it has to do with how we raise revenue to make necessary investments. As has been proven over time, the way to expand the state’s revenue base is not found by creating new taxes and taxing businesses and individuals even more.

A better approach is reducing taxes and creating an environment that is friendly to businesses and a free enterprise system that has the capacity to create well-paying jobs. If we do this, then and only then can we make necessary investments for the good of all. For proof, we can look to places like Texas and Florida that have taken bold and decisive steps to lower taxes and ease the regulatory burden on small-business owners. Both states continue to see an increase in population growth and job creation. When faced with this competition from other states, our elected officials must act. This is precisely why the recent vote to repeal the Hall Tax by the Tennessee legislature is so important.

Our state has been receiving well-deserved accolades for boosting jobs through company relocations and expansions. This is why companies like Under Armour, Volkswagen and Bridgestone Americas call Tennessee home and are providing thousands upon thousands of jobs in our state. By repealing the Hall Tax, we can build upon this recent success and chart a path forward to ensure that Tennessee will one day become the best place in the nation to start and run a business.

Raul Lopez is the executive director for Latinos for Tennessee, a local nonprofit dedicated to promoting faith, family, liberty and fiscal responsibility to the Latino community in Tennessee. For more information, please visit http://latinosfortn.com.