Lt. Gov. Ron Ramsey said Tuesday he would rather cut a bigger slice out of the tax on money saved for retirement than slice much deeper into the sales tax on food.
Ramsey said he will back Gov. Bill Haslam’s plan to drop the so-called “grocery tax” to 5 percent from 5.25 percent, but said it is “blatantly unfair” that the state taxes people for socking away money for retirement.
“Just the fairness of the issue. That we encourage [you] to save for your retirement, but when you do, we tax. That’s just wrong,” Ramsey told reporters in his office Tuesday.
Ramsey bit his tongue on the issue last year after other legislative leaders took a pass on reducing the tax on income from stocks and dividends, otherwise known as the Hall income tax. Instead, lawmakers approved plans to phase out the tax on inheritances, do away with the tax on large gifts and reduce the sales tax on food. (Read more here.)
The Hall tax currently charges 6 percent on income from interest on bonds and notes, and on dividends from stock. An individual age 65 or older and with a total income of less than $16,200 or a couple with income of less than $27,000 are exempt. By the 2012 tax year, those exemptions are raised to $26,200 for individuals and $37,000 for couples. (Read more here and here.)
Capitol Hill lawmakers last year agreed to reduce the tax by 25 cents for every $100 worth of non-restaurant food with promises to cut the tax another quarter within the next few years. While Ramsey said he would support making that cut, he said the public at large should still be responsible for paying taxes on food to keep state revenues stable at no less than 5 percent.
Legislators return to Capitol Hill to begin the next legislative session on Jan. 8.