S

At the end of the 2024 legislative session, the General Assembly slashed the state’s franchise tax for businesses, effectively eliminating the property tax portion of the levy at a cost to the state of $405 million per year.

Steered by the Republican leadership in both chambers, who said they feared litigation over the two-pronged tax, the legislature also opened a window for companies to apply for a rebate of the last three years’ worth of their franchise taxes, or $1.55 billion in refunds. Businesses had to apply between May 15, 2024, and November 30, 2024, and in the end, more than 58,000 entities did just that.

The state will not specify exact amounts. In disclosing the refunds — where an estimated 60 percent were expected to go to companies outside Tennessee — the state Department of Revenue divided the companies into three categories:

-Companies receiving less than $750: 9,420

-Companies receiving between $750 and $10,000: 33,376

-Companies receiving more than $10,000: 15,868

The database will remain accessible to the public for 30 days, after which it will be removed from the state’s website.

When the bill passed, Deborah Fisher of the Tennessee Coalition for Open Government explained why dividing into buckets for such a huge give-back was not really transparent. Senate leaders and Gov. Bill Lee had wanted no disclosure, but House leaders insisted on showing, at least minimally, what companies were getting from the state.

“It’s clear businesses wanted a secret payout,” Fisher said last year. “They tried to frame this as a refund, but if the state had been sued and agreed to pay out the refunds through a pre-litigation settlement, then the public would know how much companies would be getting.”

Some companies will receive millions of dollars, Fisher said, rendering a category of $10,000 and above functionally useless. That list includes some of the biggest companies with assets in Tennessee, including Nissan, FedEx, Brown Forman (distiller of Jack Daniels), Volkswagen, HCA, General Motors, AT&T and Amazon. The entire database is searchable until the June 30.

(Of note: Some very large companies have multiple entities operating in the state. For example, FedEx has 12 subsidiary companies listed, Nissan has five and Gannett, owner of The Tennessean, has two.)

The Lee Company, the $400-million company owned by Gov. Lee, applied for the refund. Lee has said he placed the company in a blind trust while in office.

Critics of the tax giveback noted that the state could not fund a grocery tax reduction in the last session, in part because of the loss of revenue.

“Today, we finally see the names of the corporations that cashed in on Tennessee’s largest tax giveaway — a billion-dollar refund scheme Gov. Lee and Republican lawmakers pushed through without a single court ruling,” said Sen. Heidi Campbell (D-Nashville). “No lawsuit. No legal judgment. Just a letter from corporate attorneys and a political class eager to please. Now, we’re staring down the largest budget deficit of the year — a direct result of these reckless tax breaks.”

Angela Wynn, a Rutherford County parent and public schools advocate, was critical of the impact on working families.

“Instead of closing loopholes so families can get a break on groceries, the majority of legislators chose more corporate giveaways,” Wynn said in a statement.

House Democratic Caucus Chair John Ray Clemmons (D-Nashville) was critical of the GOP’s management of the state’s finances.

“Our budget has doubled since Republicans took control in 2011, yet our roads are in worse shape, our public schools are still underfunded, access to health care and child care has decreased, and costs of living have only gone up,” Clemmons said on Saturday. “This past year’s $2 billion corporate handout, which until today was cloaked in secrecy, is but one example of Republicans’ rampant fiscal mismanagement.”

This story is courtesy of the Nashville Banner. Sign up for the Nashville Banner’s newsletters here.