Georgia income tax cut rushes to governor’s desk with thumbs up
Lawmakers signed into law late Monday a compromise plan to gradually reduce the state income tax rate over several years.
The income tax rate would flatten and drop to 5.49% from 2024, a major change from the state’s current six-step rate system that caps at 5.75%. It would then continue to decline until it reached 4.99% five years later – but only if government revenues continued to grow.
The two chambers had put forward competing visions on how lawmakers should proceed to cut the rate, but a compromise remained elusive until Monday, which was the last day of this year’s legislative session.
“This is the third time we’ve cut taxes here in the last four or five years, so I think that says a lot about how we’ve managed to get through this tough time,” the chairman said. the House, David Ralston, to reporters early Tuesday. Morning.
Tax relief was a priority for state GOP officials whose political rivals are campaigning for the complete elimination of the income tax, which funds about half of the state budget. Proponents also argued that the rate should be lowered to make Georgia more competitive with neighboring states.
But the House’s proposal ran into concerns in the Senate that he would raise taxes on about half a million Georgians.
“We are seeing savings across the board. In fact, we have no longer found anyone who pays. Everyone pays zero or less,” said Rep. Shaw Blackmon, a Republican from Bonaire who chairs the House Ways and Means Committee.
The plan would turn taxpayer deductions into a higher standard exemption and eliminate the state’s double deduction, Blackmon said.
But the proposal removes an earned income tax credit proposed in the Senate to provide relief to low-income residents. The Senate had also dropped a proposal to add limits to the film tax credit program, such as a $900 million cap on the program, in part to soften the blow to state revenue.
Blackmon said the proposal would save taxpayers $1 billion. But a left-leaning think tank, the Georgia Budget and Policy Institute, put the price tag at more than $2 billion.
Danny Kanso, senior policy analyst at GBPI, said the proposal still disproportionately benefits wealthier Georgians. With the 4.99% rate, the average annual tax reduction for the top 60% of filers would be less than $200, according to GBPI. The richest 1% would benefit from a tax break of almost $10,000.
“Once again lawmakers are rigging the tax code so that the wealthy get massive tax cuts and don’t have to pay their fair share, but pay only lip service to support low-income families and medium,” Kanso said.