Gov. Nathan Deal signed legislation to lower state income tax rates Friday, giving quiet approval to a measure that caused a national uproar after Georgia lawmakers punished Delta Air Lines for rescinding discounts for National Rifle Association members.
Deal didn’t hold a news conference or bill-signing ceremony in what amounted to an anti-climactic end to legislation that roiled the statehouse — and became part of the national debate on gun violence — throughout the week.
House Bill 918 easily passed the state Senate and state House on Thursday, a day after Senate leaders stripped a provision to eliminate sales taxes on jet fuel — something Delta had coveted.
The jet fuel break — worth more than $40 million to Delta and millions to other airlines — was axed after the Atlanta corporate giant publicly nixed a discount for NRA members over the weekend.
Lt. Gov. Casey Cagle, the Senate’s president and a top Republican candidate for governor, led the charge to kill the tax break after Delta’s announcement. A Republican state senator and another gubernatorial candidate — Michael Williams — dubbed the tax break corporate welfare before the Delta vs. NRA tiff, and he upped his criticism this week.
Cagle made national news Monday when he tweeted that he’d kill the tax break unless Delta changed its stance on the NRA discount. He and Williams hit the rounds of news shows slamming the airline over its decision.
Deal and House Speaker David Ralston, R-Blue Ridge, raised concerns that the national political flame-fanning by some lawmakers didn’t help Georgia’s image, particularly at a time when it is courting Amazon, hoping to become home to the tech giant’s second headquarters.
“We were not elected to give the late-night talk show hosts fodder for their monologues or to act with the type of immaturity that has caused so many in our society to have a cynical view of politics,” Deal said earlier this week.
Delta CEO Ed Bastian sent employees a note Friday saying the airline rescinded the discount and asked the NRA to remove the company’s name and logo from its website following the gun group’s “controversial statements after the recent school shootings in Florida.”
“Our discounted travel benefit for NRA members could be seen as Delta implicitly endorsing the NRA,” he said. “That is not the case.”
He added that the company’s objective was to remove itself from the gun debate.
“While Delta’s intent was to remain neutral, some elected officials in Georgia tied our decision to a pending jet fuel tax exemption, threatening to eliminate it unless we reversed course,” he said. “Our decision was not made for economic gain and our values are not for sale. We are in the process of a review to end group discounts for any group of a politically divisive nature.”
What was left of HB 918 was the main purpose of the measure: a cut in rates to eliminate what was expected to be a massive state windfall from the tax plan Congress passed in December.
The federal law produced a potential windfall for states because it limits or eliminates some of the deductions Georgians have used when figuring their state taxes in the past and made it far more likely that ratepayers will use the standard federal deduction, rather than lowering their state taxable income using itemized deductions.
So while many Georgians will pay less in federal taxes, at least some would have wound up with bigger state tax bills unless lawmakers made changes in Georgia’s tax code as well.
The estimated windfall escalated several times as state officials tried to figure out the impact of the federal law. By last week, when Deal and legislative leaders announced what would be in HB 918, the windfall had hit $5.2 billion over five years.
HB 918 will wipe out the potential state windfall and cut taxes on Georgians by an estimated $330 million over the next half-decade.
A fiscal accounting said Georgians would still be paying more to the state — even after the new rates — until fiscal 2021. Then the state’s tax take would drop under the bill.
The net impact would be an increase in businesses taxes but a $1.4 billion cut in individual income taxes — combined — in fiscal 2021-2023.
The measure cuts the top state income tax rate — the rate most Georgians pay on a majority of their income — from 6 percent to 5.5 percent over two years.
In addition, it doubles the standard deduction for Georgians. For married couples filing joint returns, the deduction goes from $3,000 to $6,000.
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