House and Senate leaders are renewing a push to give businesses tax incentives to hire and retain out-of-work Georgians.
They announced Thursday they've retooled a bill that passed last year. The bill was vetoed by Gov. Sonny Perdue, who said an eleventh-hour addition of a long-term capital gains tax cut would have thrown the already-stretched state budget out of whack.
The new legislation, which will be introduced next week, includes a 50 percent reduction in the long-term capital gains tax on profits from the sale of stocks, bonds and other investments. It differs from last year's tax cut in that it has a trigger that would not kick in unless the state has at least $500 million in savings. The state now has about $100 million in savings.
The legislation, sponsored by Rep. Tom Graves (R-Ranger), would give a $2,400 tax credit to any company that hires and employs for 24 consecutive months someone who has been out of work at least four weeks.
It calls for creation of a $10 million pool of money that would be doled out annually to so-called "angel investors" who are willing to help finance small and start-up businesses with 20 or fewer employees. It also would waive state fees for new businesses and return about $200 million in working capital to small businesses by phasing out the sales tax deposit they are charged.
"We know that in order to have jobs, you have to have investment," Lt. Gov. Casey Cagle told reporters at a news conference to announce the legislation's backing by both House and Senate members.
Supporters said they were not immediately able to estimate the potential loss of state revenues. Critics of last year's bill said the proposed tax cuts could cost the state $340 million. They also complained that the capital gains tax cut would mostly benefit the highest wage earners in Georgia.
Graves said his legislation is "about getting Georgians back to work."
Senate President Pro Tem Tommie Williams (R-Lyons) said lawmakers see the legislation as helping the state's finances.
"You can't collect taxes from someone who isn't working," Williams said. "We think we're going to generate revenues, not lose revenues."
David Raynor, state director of the National Federation of Independent Small Businesses, said Graves' legislation would give small businesses the boost they need to lead Georgia out of the recession.
"Yes, this would be a financial investment, but it would pay dividends for years to come," he said.
Alan Essig, executive director of the Georgia Budget and Policy Institute, said "the intention is noble."
"But it’s just not true that every credit is a job that wouldn’t have been created otherwise," he said. "They need to look at this rationally. We could end up spending a lot of money at a time we don't have a lot of money."
The state Labor Department says 365,892 Georgians are out of work.
Key provisions of the legislation
- Waive state fees for new businesses.
- Give an "angel investor" credit -- or an income tax credit of up to 50 percent of an investment made in a small or start-up business with 20 or fewer employees. The credits would be available after a two-year investment and would come from a $10 million tax credit pool.
- Give a quarterly credit toward their unemployment taxes to companies hiring someone who is receiving state unemployment benefits.
- Give a $2,400 tax credit to a company that hires and keeps on the payroll for 24 months someone who has been receiving unemployment benefits and hasn't worked in at least four weeks.
- Provide a 50 percent reduction in the capital gains tax that would be available if the state has at least $500 million in savings.
- Gradually phase out the sales tax deposit required of small businesses.
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