The Tennessee General Assembly this week passed major tax cut legislation, eliminating the $400 professional privilege tax levied on licensed individuals annually in 15 professions in Tennessee.
This, according to a press release legislators sent out this week.
Senate Bill 398, sponsored by Senator Brian Kelsey, R-Germantown, repeals the tax for accountants, architects, sports agents, audiologists, chiropractors, dentists, engineers, landscape architects, optometrists, pharmacists, podiatrists, psychologists, real estate brokers, speech pathologists, and veterinarians.
“The idea that earning a living is a privilege is insulting to hardworking Tennesseans,” the press release quoted Kelsey as saying.
“For many years, this tax has unfairly singled out individuals in 22 of the state’s 100 licensed professions by taxing them for the so-called ‘privilege’ of earning a living. I am very pleased that it will end for the majority of these taxpayers.”
Action on the legislation comes after a 2016 Tennessee Advisory Commission on Intergovernmental Relations report said some professions in the state that are not taxed have higher average incomes. The report also noted that incomes of professionals vary significantly within the taxed professions and those in occupations earning lower salaries, pay the same amount as those earning more. Professionals in these areas must pay the tax annually even when they conduct no business. Tennessee is one of only six states that impose a professional privilege tax, the press release said.
Kelsey said he would continue efforts next year to repeal the for the remaining seven professions with tax relief funds set aside by the General Assembly. Lawmakers want to offset a windfall of online sales tax revenue expected to be realized as a result of the U.S. Supreme Court’s Wayfair decision with additional tax relief. The decision allowed states to collect online sales taxes, the press release said.
“First, the General Assembly repealed the gift tax and eliminated the inheritance tax through a four-year phase out in 2012. Then we passed my constitutional amendment prohibiting the state income tax in 2013, which was approved by the people of Tennessee in 2014,” the press release quoted Kelsey as saying.
“We also phased out of the Hall Tax on interests and dividends beginning in 2016, which will continue over the next two years. This is in addition to cutting the sales tax on groceries by almost 30 percent. In the meantime, we have implemented efficient and effective budgeting practices that save taxpayer dollars. I am thrilled that we have now repealed the professional privilege tax for 15 different professions.”
– – –