In recent years, legislators have been successful in trimming the current 5 percent tax levied on interest and dividends earned from investments. Now, they have the tool in place to completely eliminate the the Hall tax.
This could create a fiscal nightmare for city and county officials struggling to balance local budgets. And it will soon place a greater burden on local taxpayers.
The state typically collects more than $200 million from the Hall tax. While that amount represents just a mere fraction of the state’s total revenue collections, local governments will feel the greater pain when the Hall tax is abolished.
More than $60 million of those tax revenues go back to the counties and cities where those taxes are collected.
Previous changes to Hall tax rate had reduced the amount returned to local governments by $790,000. Abolishing the tax altogether will have a more significant fiscal impact.
Johnson City, for example, will lose more than $700,000 in annual revenue. It would take more than two pennies on the property tax rate to replace that.
In short, the abolishment of the Hall tax means more pain for city and county taxpayers. Shifting the tax burden from one level of government to another is a deliberate attempt to mislead constituents when it comes to the cost of doing business.