Tenn. Investment and Economic Development Act
HB 2120, sponsored by Rep. Mike Kernell (Memphis), as introduced in the 2005-2006 Legislative Session.
- Raises over $600 million to invest in Tennessee's future.
- Lowers taxes for 4 out of 5 Tennesseans.
KEY PROVISIONS
Completely repeal the state and local sales tax on grocery food.
Currently, the state sales tax on food is 6% and
local governments can add up to 2.75% for a total of 8.75%. This will be zero.
Cut the state sales tax on non-food items from 7 to 4%.
Currently, the state sales tax on non-food items
is 7% and local governments can add up to 2.75% for a total of 9.75%. The
new maximum will be 6.75% with most urban areas like Knoxville, Chattanooga,
Nashville, and Memphis at 6.25%.
Eliminate the Hall Income Tax.
The Hall Income Tax, which is applied to certain
types of investment income at a rate of 6% with deductions of only $2,500
for couples. This will be replaced by the broad-based income tax below that
will apply to both earned and unearned income. For retirees living off investment
income, the family deduction will go up from $2,500 under the Hall Tax to
$30,000 under the new plan.
Hold local governments harmless.
Any losses incurred (to) BY local governments from
the repeal of the local sales tax on food and the Hall Income Tax, will be
reimbursed by the state so local governments will not be (e)Affected either
way.
Establish a broad-based, graduated income tax with generous personal
deductions.
The new graduated income tax will have a front-end
exemption of $15,000 for single filers, $30,000 for filers married and filing
jointly, and a deduction of $2,500 for each dependent.
Tax Brackets – Including Base Deduction, But
Not Dependents |
Married filers: |
Heads of household: |
Single filers: |
3.5% for $30K - $49,999
4.25% for $50K - $69,999
5% for $70K - $99,999
6% for $100K - $149,999
7.25% for $150K+ |
3.5% for $22,050 - $36,749
4.25% for $36,750 - $51,449
5% for $51,450 - $72,499
6% for $73,500 - $112,499
7.25% for $112,500+ |
3.5% for $15K - $24,999
4.25% for $25K - $34,999
5% for $35K - $49,999
6% for $50K - $74,999
7.25% for $75K+ |
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