This year’s legislative session stands to be one in which most bills don’t make it very far. But in one case, lawmakers could take a big step by deciding to go no further.
Let me explain.
This week, the state Senate is expected to take up a constitutional amendment that would cap Georgia’s top income-tax rate at 6 percent. David Shafer, president pro tempore of the Senate, is the sponsor of the bill, SR 415. If passed by the Senate and then the House, the amendment would go before voters in a referendum this November.
“Two of our neighboring states, Florida and Tennessee, have no income tax,” Shafer explained. “And every other neighboring state has an income tax lower than ours. North Carolina just lowered its maximum [income] tax rate to 5.75 percent so that it can say its income tax rate is lower than ours.
“I believe it puts us at a competitive disadvantage.”
Georgia Republicans have long discussed lowering the income-tax rate. Shafer, who represents parts of Gwinnett and Fulton counties, said this amendment can be an important step toward doing that.
“I would like to see the income tax reduced,” he said, “not just because I believe in limited government but because I believe it makes it more difficult for us to attract business investment and jobs.
“But I think capping it sends a clear signal that Georgia is a low-tax state. And the neighboring states — even though their tax rate may not be as high as ours, there’s nothing that would prevent them from raising it tomorrow.”
As for Georgia, he noted, “No one has even proposed raising the income tax. But it’s the last tax I would increase.
“There are excise taxes, a small [state] property tax that’s being phased out, sales taxes, lottery ticket sales — there are other sources of revenue besides taxing productivity. Taxes tend to discourage the activity being taxed. And the last thing we should discourage is productivity.”
If a future General Assembly disagreed, it could eliminate exemptions and deductions to increase the amount of income subject to the tax. But the only way to increase the rate would be via another constitutional amendment.
Shafer said he also favors capping sales tax rates, except for infrastructure projects approved by voters in a referendum (such as a SPLOST or T-SPLOST) or to offset lower income taxes. But for now, he’s focused on SR 415.
In a way, Shafer’s bill is a simple nod to reality. Republicans are not going to raise the income-tax rate. If Democrats are inclined to do so, they haven’t admitted it.
Last year, the left-leaning Georgia Budget and Policy Institute created a “menu” of 20 different tax hikes for lawmakers to consider. The entire list came to about $4 billion per year; a proposal to raise the top rate to 7 percent for high earners represented just $146 million of that total, less than 4 percent.
Clearly, if liberals want to raise taxes, they’ll have other options. Don’t let them tell you otherwise.
I can imagine one scenario in which Georgia might need to consider raising income-tax rates: a massive devolution of governance and taxing authority from the federal government, so that Atlanta needed to raise more revenue from Georgians than Washington did.
If that happens, I’ll ride my unicorn around like Paul Revere, awaking Georgians to the need to act. Until then, Shafer has the right idea.
