Perdue will veto cut in capital gains tax

Georgia investors dreaming of a slashed capital gains tax cut appear to be out of luck.

Gov. Sonny Perdue said Monday he will veto House Bill 481, which would have cut the tax on profits of certain investments by 50 percent. His decision led one business association to call on lawmakers to override Perdue’s veto when they are next in session and prompted one of Perdue’s political acolytes to declare herself “disappointed.”

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Perdue told reporters he would veto H.B. 481 because “while I agree with stimulative activity, unlike the federal government who can run a deficit, Georgia is a balanced-budget state and we cannot run a deficit.”

Estimates had suggested the bill, which would also offer businesses tax credits for hiring unemployed workers, would cost the state more than $1 billion. Given the state’s revenue situation — Perdue announced Monday that April’s tax collections were off by 20 percent from April 2008 — that was too high a tab.

“It has to be affordable or it’s not possible,” he said.

But the state director of the National Federation of Independent Business said H.B. 481 was “sound legislation.” Although David Raynor called for an override, lawmakers have rarely reversed Perdue’s decisions.

This was a decision that disappointed Karen Handel, a former Perdue deputy chief of staff, current secretary of state and 2010 GOP gubernatorial hopeful.

While she said she understood Perdue’s concerns about the timing of the tax relief, “cutting the capital gains tax has been a cornerstone of Republican economic policy for decades.”

Sen. Eric Johnson (R-Savannah) voted for the measure in the Senate but, as a gubernatorial hopeful, declined to second-guess the governor.

“I don’t care for Monday morning quarterbacks and don’t want to be one now,” he said.