Two tax relief bills that aim to keep senior citizens in Tennessee during their retirement years have begun moving through the State Senate in a week that was filled with action on some of the most important bills of the 2012 legislative session. One bill continues an incremental approach in phasing out Tennessee’s Hall Income Tax for senior citizens, while the other would provide relief by raising the inheritance tax exemption level to $1.25 million with the objective of reaching a $5 million level in subsequent years.
Hall Tax Relief -- The Hall Tax is imposed on individuals and other entities receiving interest from bonds, notes and dividends from stock. Enacted in 1929, this tax collects approximately $190 million in revenue, with about one-third going to local governments. Last year, legislation was passed to provide Hall Tax relief to citizens age 65 and older by raising the standard income exemption from $16,200 to $26,200 for single filers and from $27,000 to $37,000 for joint filers.
Of the individuals who pay the tax, 48 percent are age 65 and older. Many of the seniors live on fixed incomes and rely on investment income as their “nest egg” for retirement.
Senate Bill 2535 further raises the exemption for citizens 65 years of age and older to $36,200 for single filers and $47,000 for those filing jointly beginning January 1, 2013.
The Senate Tax Subcommittee also approved Senate Bill 2535 that would require annual adjustment on July 1 each year, to the maximum allowable income exemption levels, for single and joint filers of the Hall Income Tax who are 65 years of age or older. The adjustment would apply to the percent change of the consumer price index as published by the U.S. Department of Labor.
Inheritance Tax Relief -- Similarly, Senate Bill 3762 takes a first step towards providing inheritance or estate tax relief, which is also called the death tax. Currently, the tax applies to estates worth more than $1 million. Tennessee has a higher inheritance tax when compared to its neighbors, which range from 5.5 percent to 9.5 percent.
Retirees have told lawmakers that the death tax is a key reason for them relocating outside Tennessee. There is also great concern that the inheritance tax places a heavy financial burden on family farms and family businesses. The bill is included in Governor Bill Haslam’s legislative package.
Reduction of Sales Tax on Food -- In addition, the Senate Tax Subcommittee recommended key legislation to reduce the state portion of the sales tax on grocery food from 5.5 percent to 5.25 percent, with the goal of lowering it to 5.0 percent in three years. Senate Bill 3763 has been a goal of many Republicans in the General Assembly over the past several years. This year it was included in Governor Bill Haslam’s legislative package and is funded in the budget, which gives it a major boost towards passage. The first reduction in the sales tax on food was sponsored by Senator Mae Beavers (R-Mt. Juliet) who is also supporting passage of the measure to reduce the tax this year.
Legislation replaces Court of the Judiciary with new panel
The Senate Judiciary Committee has approved legislation to address concerns regarding the transparency and effectiveness of the Court of the Judiciary, the body charged with investigating and disciplining judges. The legislation, sponsored by Senator Mike Faulk (R-Church Hill), seeks to exercise the legislature’s constitutional duty to remove judges for misconduct and the Judiciary's obligation to police its own members.
The bill follows hearings initiated by Senate Judiciary Committee Chairman Mae Beavers (R-Mt. Juliet) to investigate the practices and procedures of the judicial oversight body. It also comes after recent reports in Knoxville and Nashville regarding judicial misconduct that exposed some deficiencies of the body and its effectiveness in exercising the legislature’s obligation to remove judges guilty of misconduct.
The Court of the Judiciary was created by the legislature to investigate and, when warranted, act on complaints against judges. Currently, six of the eleven-member board is appointed by the Supreme Court and three are selected by the Tennessee Bar Association. The Court has broad jurisdiction to internally investigate, hear and determine charges sufficient to warrant discipline or removal of a judge.
Senate Bill 2671 abolishes the Tennessee Court of the Judiciary and replaces it with a new body, the Judicial Board of Conduct. Under the bill, appointments would be made by the Tennessee Judicial Conference, the Speakers of the House and Senate, and the Governor. Furthermore, it provides for a less restrictive standard that must be met for a complaint to move forward, as well as more transparency in regards to its reporting to the legislature and to the public. The Board would have the authority to take action against state judges and could endorse punishment, including removal.
“This bill moves us in the right direction,” said Senator Beavers. “Simply sitting by and doing nothing would be a travesty to many Tennesseans who hope to have fair and impartial judicial proceedings.”
The bill now goes to the full Senate floor for final consideration.
Prescription drug abuse legislation approved by Senate Judiciary Committee
Legislation that would curb prescription drug abuse in Tennessee was approved by the Senate Judiciary Committee chaired by Senator Mae Beavers this week. Tennessee ranks second in the nation in regard to the overutilization of prescription pain medications. The bill would require doctors or their designees to check the state’s Controlled Substance Monitoring Database for patients’ prescription history before prescribing an opioid or benzodiazepine substance.
Opioids are painkillers such as morphine, methadone, buprenorphine, hydrocodone and oxycodone. Statistics from the Tennessee Drug Diversion Task Force show that 56 percent of patients who receive opioid prescriptions have filled another opioid prescription within the previous 30 days. Benzodiazepines are depressant drugs such as alprazolam, clonazepam, diazepam, lorazepam and triazolam. Young adults ages 18 to 25 have the highest annual rates of prescription drug abuse.
Over the last ten years, more than 8,000 Tennesseans have lost their lives from drug overdoses. Last year, there were more deaths in Tennessee due to drug overdoses than motor vehicle accidents, homicide or suicide.
Senate Bill 2733, which is included in Governor Bill Haslam’s legislative package, requires pharmacies to collect a patient’s prescription information and report that information to the database within seven days. Currently it must be reported within 40 days. The bill also enhances penalties for doctor shopping from a Class A misdemeanor offense to a Class E Felony when it involves 250 or more pills. The stiffer penalties allow law enforcement officials to go after dealers who distribute the drugs illegally.
Under the legislation, information from the database regarding patients’ prescription information can be released to law enforcement officials if they are engaged in an investigation or through a court order. With appropriate board approval, doctors’ and pharmacists’ prescribing / dispensing information could also be released to departmental investigators to help identify those medical professionals who are contributing to Tennessee’s prescription drug problem.
The bill now goes to the Senate Health and Welfare Committee for consideration.