Lawmakers debate eliminating Georgia’s income tax
Supporters and opponents of eliminating Georgia’s income tax on Monday aired competing visions of what would happen if the state gave up its largest source of revenue.
Supporters said eliminating the 5.19% personal income tax would expand the state’s economy and give Georgians an immediate financial boost at a time when affordability is a top concern.
“Families in Georgia are having a hard time paying for gas, groceries and child care,” said state Sen. Blake Tillery, R-Valdosta, following a meeting of a committee studying the issue. “Why would we not be trying to give them a 5% raise overnight?”
Opponents said the move would force Georgia to expand its sales tax — a move they say would benefit the wealthy at the expense of seniors and low- and middle-income residents.
“Republicans want to jack up taxes on the middle class to give rich people a massive handout,” Democratic state Sens. Ed Harbison and Nan Orrock said in a statement following the meeting. “This handout will make raising a family, buying a house or running a business more expensive.”
Changing how the state taxes its citizens has become a hot topic ahead of a big election year.
On Monday, Secretary of State Brad Raffensperger — a Republican candidate for governor — announced his plan to curtail property tax growth. House Speaker Jon Burns has also made property tax relief a top priority.
In the Senate, Lt. Gov. Burt Jones — another Republican gubernatorial candidate — is pushing the elimination of the income tax. And Tillery — a candidate for lieutenant governor — is leading the charge as chairman of the committee.
The state’s personal income tax generates about $15.7 billion a year — by far the state’s largest source of income. The next-largest source of revenue is the sales tax, at $9.4 billion.
On Monday, Tillery’s committee heard testimony from conservative economist Arthur Laffer, who said the state could make up the lost income tax revenue by broadening the state sales tax. Laffer said the state could even lower its sales tax rate if the tax was broad enough.
The liberal-leaning Georgia Budget and Policy Institute released a study Monday that found the state would need to triple the state sales tax — from 4% to 12.02% — to make up for the lost revenue of eliminating the personal and corporate income tax. Were that to happen, 80% of Georgia households would see a net tax increase of about $1,000 per year, the study found.
Tillery dismissed the GBPI report as “third-grade math.” He wants to eliminate the personal income tax but not the corporate tax. And he thinks the state can make up the lost revenue by eliminating billions of dollars of tax breaks for corporations and special interests.
But removing tax incentives for business interests is politically difficult and lawmakers would face fierce opposition from lobbyists hired to protect them.
The committee has already ruled out raising the sales tax on groceries. On Monday, Sen. Jason Anavitarte, R-Dallas, suggested he wouldn’t support eliminating sales tax breaks that benefit children, public safety or the military.
The committee is expected to unveil its recommendations by the end of the year.
About the Author
David Wickert writes about the state budget, finance and voting issues. Previously, he covered local government and politics in Gwinnett and Fulton counties. Before moving to Atlanta, he worked at newspapers in Illinois, Tennessee, Virginia and Washington.
