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Key elements of tax plan
House Bill 445 would make sweeping changes to state tax policy. Major proposals in the plan include:
- Reducing the state income tax rate from 6 percent to 4 percent over three years
- Increasing the state sales tax from 4 percent to 5 percent and tax groceries
Tax cuts that could face ax
House Bill 445 would eliminate wide swaths of state tax credits and exemptions. Among those targeted for elimination are credits for:
- The purchase of jet fuel
- Making some single-family homes accessible to the disabled
- Certain expenses related to caring for a loved one
- Disaster assistance funds
- Private driver education courses
- Child and dependent care expenses
- Teleworking
- Donation of real property
- Clean energy property
- Adoption of a foster child
- Purchase of one single-family residence
- Employers providing child care
- Manufacturing and telecommunications facilities
- Water conservation facilities and investment property
- Qualified research expenses
- Port traffic increases
- Low-emission vehicles
- Quality jobs
House leadership on Monday unveiled an 81-page tax proposal that is guaranteed to please and upset equal subsets of Georgians. But, sponsors said in an afternoon news conference, that’s sort of the point.
Rep. John Carson, R-Marietta, the sponsor of House Bill 445, said his bill is designed to be a conversation starter — albeit one that he believes would help millions of Georgians.
Carson said his plan is about “shifting power away from the state and toward the kitchen table.”
But that plan, in addition to lowering the income tax from 6 percent to 4 percent, would also raise the state sales tax and require groceries be taxed before they hit that kitchen table.
A modest cigarette tax increase from 37 cents per pack to 65 cents per pack by 2019 is included in the bill, which also would eliminate dozens of tax breaks for businesses and individuals, including:
- A sales tax exemption created specifically for Delta Air Lines.
- Income tax credits for child care and elder care expenses.
- Tax credits for adoption of foster children.
Surrounded by Speaker David Ralston, R-Blue Ridge, and Majority Leader Larry O'Neal, R-Bonaire, Carson said his bill would put $400 a year back into the pockets of a family with an income of $48,000 a year. While he's asked for an official state estimate of the bill's financial impact, he said the goal is for it to be revenue-neutral or an overall tax cut.
Transportation plan loses co-sponsor
The bill is being introduced as this year's other major tax proposal — the one dealing with transportation revenue — appears to have stalled. House Bill 170, designed to raise between $1 billion and $1.5 billion a year in new revenue for infrastructure, would end state sales taxes on gasoline and replace them with a state excise tax on fuel of 29.2 cents per gallon.
Billed as one of the top priorities of Ralston, Gov. Nathan Deal and Lt. Gov. Casey Cagle, the bill passed out of committee last week but has since failed to move. A co-sponsor of HB 170, Rep. David Stover, R-Palmetto, announced he's pulled his support for the bill, calling it a $500 million tax increase.
Ralston, however, said the transportation plan is gaining support as its sponsor, Rep. Jay Roberts, R-Ocilla, answers members' questions. There is no connection between HB 170 and Carson's tax bill, Ralston said.
“People are taking a long, careful look and people who might have had questions last week are telling me they’re satisfied,” Ralston said.
Plan to move at deliberate speed
That approach will also apply to HB 445, Ralston said. The bill designed as a debate-starter and follows the plan enacted several years ago to overhaul the state’s tax structure, he said. Carson has worked on the bill for two years and there is no promise of quick passage, Ralston said.
“It’s better to do it right than do it quickly,” he said.
Although supporters said the bill will take a deliberate path through the General Assembly, there was urgency to getting it filed Monday.
State law says no bill “having a significant impact” on state revenue may be introduced after the 20th day of the 40-day legislative session. Monday was Day 20, and House rules were suspended to allow HB 445 to be officially introduced on the same day it was filed.
The bill will surely generate debate, with support from many businesses and fiscal conservatives, as well as likely opposition from those who view sales taxes as regressive. The bill also would kill several tax credits for job creation, making it likely that some local governments will complain that the plan keeps the state’s lucrative film tax credits for Hollywood productions but takes away incentives for landing permanent jobs.
But, since the bill will not even be on the Legislature’s website until early Tuesday, many entities or officials declined to comment. That includes the Georgia Municipal Association and the governor’s office.
“We need a tax structure that encourages families to save and businesses to invest so that Georgia can remain competitive with our neighboring states,” Ralston said. “This bill will go through the committee process and, as always, constructive input is welcomed.”
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