(GA Recorder) — House lawmakers signed off a tax cut proposal Wednesday that would cut state revenues by $1 billion over objections the proposal disproportionately benefits Georgia’s wealthiest residents.
The proposal would replace the state’s graduated income tax rate system, which now tops out at 5.75%, with a single, reduced 5.25% known as a flat tax.
The bill would also raise the standard exemption to $12,000 for single tax filers and $24,000 for married couples, which is a provision supporters say is meant to offset any tax increase on lower-income residents caused by the proposed flat tax.
The plan would take effect in 2024.
“With savings across the board, we believe this tax cut reform will make us more competitive for wage earners at every income level,” said Rep. Shaw Blackmon, a Bonaire Republican who chairs the committee focused on taxes. “It’s simple, it’s fair, and it allows Georgians to keep more of their money.”
House Speaker David Ralston, a Blue Ridge Republican, said the measure will “give Georgians meaningful, permanent tax relief.” The House recently backed the governor’s proposal to send $1.6 billion in surplus funds back to taxpayers as a one-time refund.
The bill, which was filed two weeks before a key legislative deadline, is a priority for House Republicans who are facing election-year pressure to cut taxes. Some candidates, like former U.S. Sen. David Perdue who is challenging Gov. Brian Kemp, have called for the elimination of the income tax.
“This bill has been rushed through and in an election year because it’s going to look good on a mailer,” said State Rep. Matthew Wilson, a Brookhaven Democrat who is running for state insurance commissioner. “But it’s not smart policy for Georgia and I ask you to oppose it.”
The bill cleared the House with a 115-52 vote, with more than a dozen Democrats siding with GOP lawmakers.
State Rep. Dexter Sharper, a Valdosta Democrat, said afterward that he thought people needed a break after a rough last two years, and he thought the proposal was a fair way to do it.
“There’s no way I was going to vote against giving people some of their money back,” Sharper said. “Let’s just give everybody something back so we can move forward and stimulate this economy because $1 billion is a lot of money.”
Critics, though, have panned the proposal as a tax cut primarily benefiting wealthier Georgians. About 62% of the savings would go to the top one-fifth of the state’s earners making more than $109,000, according to the Georgia Budget and Policy Institute.
Meanwhile, 1.4 million Georgians would see no change, and about 10% – or about a half-million people – would see a tax increase, according to GBPI.
“Members of the Senate must reject this risky, regressive plan to enrich the wealthiest at the expense of hardworking families that could jeopardize the fiscal health of our state,” said GBPI senior tax and budget policy analyst Danny Kanso.
State Rep. Jasmine Clark, a Lilburn Democrat, urged her colleagues to vote against the bill because of its potential to increase taxes for more than 500,000 people. She also questioned how the state will pay for the tax cut.
“Right now, our economy is recovering from the pandemic, and because of that, we are seeing record price increases. We’re seeing inflation, not to mention we’re in the midst of a war. Right now is not the time to raise taxes on some Georgians, on any Georgians,” Clark said.
State revenues have jumped in Georgia after an initial dip early in the pandemic. Last year, the state was left with billions in surplus revenues when the fiscal year ended June 30, and tax revenues for this year are up nearly $20 billion, or 16%.
Lawmakers are also considering increased spending, with the governor offering up a new $30.2 billion spending plan that is about $3 billion larger than this year’s budget as originally approved last year. The House is set to unveil its budget proposal Thursday morning.
