Gov. Lee’s Franchise Tax Legislation Meets Opposition
Nashville – Gov. Bill Lee’s proposed legislation on franchise tax is facing a daunting opposition, delaying any decisive measures on the bill. The Senate Finance Ways and Means Subcommittee did not vote on Tuesday but raised several objections prompting a rigorous debate.
Questioning The Unbudgeted Profit
Sen. Jeff Yarbro (D-Nashville) raised his concerns to the Department of Revenue Commissioner David Gerregano. Yarbro took issue with the potential implications of the legislation, suggesting that the proposed tax cuts for businesses might just lead to frivolous spending. “Aren’t you just giving businesses an un-budgeted profit?” Yarbro questioned. He worried that while some businesses might invest, others could resort to non-essential purchases.
The Details of the Legislation
Currently, under the franchise tax law, a company is subjected to taxes on its net worth or the number of properties it owns in Tennessee — whichever is greater. The legislation intends to repeal the property tax section of this law. This adjustment is estimated to save business owners about $400 million annually and simultaneously create a similar deficit in the state’s funding.
Aligning with Other States
David Gerregano explained that necessitating taxes on net worth is a practice consistently adopted in several states. Gerregano also emphasized that Tennessee is the only state persisting with the property tax measure. Furthermore, Gerregano indicated the legislation’s intent to establish a fund for potential reimbursements for taxpayers who might have overpaid based on property tax in the past three years.
Critical Examination by Yarbro
Yarbro, however, maintained a critical view of the proposed changes. He interrogated Gerregano over the lack of precedence for tax payouts exceeding $1 billion. The lack of such precedence echoes Yarbro’s stance that the legislation might benefit taxpayers who might have no legitimate claims or those whose claimed damages might undeservingly exceed benefits.
Gov. Lee’s proposed legislation will now have to go under consideration again in the Subcommittee’s meeting scheduled for March 12.
Note:
This is a short summary of the original story, which was first reported in Nashville. We’ve tried our best to offer an accurate summation, but for the full context and nuanced reporting, we recommend going to the original source.
