NASHVILLE (AP) – Gov. Bill Haslam says he doesn't plan to eliminate Tennessee's estate tax and Hall income tax despite efforts by several Republican lawmakers to kill the measures because they believe they're hurting the state's economic development.
The Republican governor told The Associated Press that both taxes are bad for the long term because they "chase capital away from the state."
However, he said Tennessee is still in tough economic times and he doesn't have a way to replace that revenue.
"I don't think either one of those really are helpful," Haslam said Thursday. "Right now it's just hard to figure out how we're going to replace those."
The state collected $172 million from the Hall income tax last year and sent more than one-third of that – $62 million – back to the counties and cities where those who paid the tax live.
While the Hall tax isn't a major source of revenue for the state government, many local governments depend on it for a big portion of their budgets.
Nevertheless, Republican Senate Caucus Chairman Bill Ketron of Murfreesboro has said he would like to eliminate both taxes. He told the AP on Friday that from an economic development standpoint they're holding the state back because some people are moving elsewhere.
He said he recently talked to one business owner who moved to Florida, which doesn't have a Hall tax or estate tax, also called the "death tax."
Ketron said the man called Tennessee a "great place to live, but it's a terrible place to die."
The estate tax is based on the difference between the inheritance tax and the "state death tax credit" allowed on the federal estate tax return, according to Tennessee's Department of Revenue.
Rep. Joe Carr is another opponent of the taxes. The Lascassas Republican didn't immediately return a call on Friday, but The Daily News Journal in Murfreesboro reported that he recently told a group that he knew of six people who moved out of Tennessee to avoid the estate tax.
"Men and women who have the ability to create jobs are leaving the state," Carr said.
While the lawmakers would like to eliminate the taxes, they acknowledge this may not be a good time because of budget constraints.
"We can't be like Congress," Ketron said. "We have to be very careful and meticulous to see how we replace that lost revenue."
Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.