With affordability a top concern heading into the elections this year, Georgia’s Senate Republicans are proposing billions of dollars in cuts to the state income tax.
A study committee assigned by Lt. Gov. Burt Jones, a Republican and advocate for abolishing the 5.19% tax, approved recommendations on Wednesday that would eliminate it for lower-income earners starting in January, eventually abolishing it altogether.
The committee voted to recommend eliminating the tax on the first $50,000 in annual income for individuals and the first $100,000 for couples.
The cut would take effect Jan. 1. That is midway through the next fiscal year, when it would divert $3 billion from the state budget. It would deduct $6 billion in the following full fiscal year.
The committee also called for increasing the cuts to higher income levels in the future, with abolishment of the $16 billion revenue stream by 2032.
Sen. Blake Tillery, R-Vidalia, who led the committee, said the initial cuts need to help teachers, police officers and other workers who are struggling the most with the cost of living. He said two-thirds of Georgia workers would see their income tax eliminated at first.
“Let’s give breaks to families who are feeling the crunch the most first,” he said.
Affordability has become a top issue for Republicans in Georgia and nationally, leading to concerns about a voter backlash this year.
Jones is running for governor and Tillery, who also chairs the Senate’s budget-writing Appropriations Committee, is running to succeed him as the leader of the Senate. Also in contention for lieutenant governor are two other members of the study committee: Sen. Steve Gooch, R-Dahlonega, the former Senate majority leader; and Sen. Greg Dolezal, R-Cumming, who is vice chairman of the Appropriations Committee.
John F. Kennedy, a Macon Republican who was Senate President Pro Tempore during the last legislative session, also served on the committee until he resigned last month to focus on his lieutenant governor primary campaign against those other three committee members.
The recommendations said the income tax would be eliminated without raising sales taxes or implementing a state property tax — and that no cuts to services would result.
The recommendations passed along party lines, with the three Democrats on the committee opposed.
Sen. Nan Orrock, D-Atlanta, noted that the quarter of highest earners would benefit the most from full abolishment of the income tax in 2032, keeping more than $11 billion in their wallets.
Abolishing the income tax for all earners would also eliminate a revenue stream equal to more than 40% of the current $37.7 billion budget. The Democrats were dubious that this would not strain government services.
Orrock pointed to a dearth of health clinics in some counties.
“We have we have a lot of funding needs,” she said.
Tillery said the elimination of the tax on earnings up to $50,000 and $100,000 could be achieved with some simple steps.
He said the first $3 billion could be covered with a mix of surplus revenue — state income exceeded expenses by nearly $2 billion in the fiscal year that ended in July — and new financing. With interest rates high, the state has been paying cash for capital projects rather than borrowing money through bonds. By borrowing the money instead, it would have another $1 billion to put toward income tax reductions, he said.
The state could fund the rest of the cut when it reaches $6 billion in fiscal year 2028 by slicing 10% off the $30 billion spent on tax credits and tax exemptions, he said.
To become law, the Senate would need cooperation from the House of Representatives.
Speaker Jon Burns, a Republican from Newington, said Wednesday that his chamber wanted to collaborate with the Senate on reducing the income tax rate, like it did last year when the General Assembly dropped it a fifth of a percentage point, from 5.39%. But he sounded a note of caution about altogether eliminating the revenue stream.
State government must be able to pay for services such as health care, public safety and education, he said. “We have to have the details, and it has to work.”
This article is available through a partnership with Capitol Beat News Service, a project of the Georgia Press Association’s nonprofit, tax-exempt Educational Foundation.
