SMYRNA — Rutherford County legislators said Tuesday they will work to kill Tennessee’s estate tax and the Hall income tax in an effort to bolster job growth.
“We have the highest death tax in the country,” state Rep. Joe Carr told a Chamber of Commerce crowd at the Town Centre here during a legislative preview luncheon. The General Assembly will convene in January.
Carr said there is “strong evidence” the state can create more jobs by eliminating the estate tax, which, he said, causes older people to leave the state when they could stay here and create jobs.
The Lascassas Republican said he knew of six people who moved out of Tennessee at an older age so they could avoid the “death tax.”
“Men and women who have the ability to create jobs are leaving the state,” Carr said.
Tennessee’s inheritance and estate taxes are imposed on decedents’ estates that exceed the maximum single exemption, which was $650,000 in 1999 and increased to $1 million in 2006 and afterward. The estate tax is based on the difference between the inheritance tax and the “state death tax credit” allowed on the federal estate tax return, according to Tennessee’s Department of Revenue.
The tax rate is 5.5 percent for the first $40,000 over the exemption, 6.5 percent for the next $40,000 to $240,000, 7.5 percent for the next $240,000 to $440,000 and 9.5 percent for $440,000 and above.
A study by Arthur Laffer and Wayne Winegarden of Laffer Associates found that if Tennessee had eliminated its gift and estate taxes 10 years ago, its economy would have been 14 percent bigger in 2010, with 200,000 more jobs. State and local governments also would have netted $7 billion more in tax revenue.
The Hall income tax, which was enacted in 1929, is a 6 percent tax on dividends and interest. In fiscal 2011, it generated about $129 million for state coffers, with Tennessee getting 62.5 percent of the cut. It also brings in hundreds of thousands of dollars for cities and counties with high concentrations of wealthy residents. Municipalities draw 37.5 percent depending on where the taxpayer resides.
“We would like to eliminate the Hall income tax as well,” said state Sen. Bill Ketron, who chairs the Senate Majority Caucus.
Changes are expected this legislation session on the teacher evaluation system adopted this year as part of Tennessee’s First to the Top program.
The evaluation system is considered a burden on administrators and teachers because of the number of evaluations required each year for tenured teachers and inexperienced teachers. Scores from the Tennessee Comprehensive Assessment Program also count for the first time toward teachers’ evaluations.
As legislators fielded questions from the audience, La Vergne Mayor Senna Mosley told them that her daughter, an MTSU senior education major, is afraid to enter the profession because experienced teachers are telling her “to run.”
“She has wanted to be a teacher all her life,” Mosley said, but she deals constantly with TCAP and hears teachers telling her, “Run, run, run while you can.”
State Rep. Mike Sparks, R-Smyrna, responded, saying, “The teacher evaluations, in my opinion, are extreme,” but teachers shouldn’t be telling education students to flee the profession before they even start.
State Sen. Jim Tracy called it “sad” that students are getting that message.
“Teaching is one of the most important things you can do,” said Tracy, a Shelbyville Republican. “Is it going to be tough? Absolutely. It’s a tough profession.”
State Rep. Pat Marsh, a Shelbyville Republican who represents southwest Rutherford County, told the group he is serving on a committee set up to get rid of restrictions that put unnecessary burdens on businesses.
Regulation is needed because some businesses believe they can operate without regard to the environment and public, but Marsh said he believes more “balance” is needed to give small businesses a better chance to grow.
State regulations “have to be expedient and fair,” Marsh said.
State Rep. Rick Womick, a Rockvale Republican, predicted changes will be made to require the election of judges at the state level rather than “de-selection.”
“We need to go back to the Constitution,” Womick said.
The Tennessee Court of the Judiciary also is likely to be “revamped” to create more accountability, Womick said.
The court, which deals with complaints against judges, is under fire from many legislators who believe it should be more open and do more to get rid of judges who commit ethical violations.