Cybersecdn- On New Year’s Day, a $1 billion tax cut that was passed by the Republican-controlled General Assembly during an election year will go into effect. The state income tax rate will be 5.49% in 2024, down from 5.75% now because of the phased-in tax cut. Every year, the tax rate will go down until it reaches 4.99% in 2029.
However, earlier this month, Gov. Brian Kemp said he was going to ask lawmakers to speed up the cuts by one year. The rate of taxation would be 5.39 percent in 2024 if lawmakers agree.
Supporters say that lowering taxes for everyone is a better way to create jobs than the different tax credits and exemptions that the General Assembly has passed over the years for different businesses.
“You’re not showing any favoritism when you do it across the board,” said Kyle Wingfield, president and CEO of the Georgia Public Policy Foundation, a think tank that supports free-market approaches to public policy problems. “Policy is no longer affected by politics.”
Wingfield pointed out that targeted tax relief doesn’t help new businesses that policymakers can’t see coming. “When you take a more targeted approach, you help a business or industry that you already know about with tax breaks,” he said. “By lowering taxes for everyone, you’re encouraging people to start the next business that will grow into a big one.”
Kemp and all 236 seats in the Georgia House and Senate were up for election last year, so a lot of people liked the tax cut. On the last day of the 2022 parliamentary session, only two Democrats in the House voted against it.
Democratic senators in the 56-person state Senate voted “no” on the bill, nonetheless. A report from the Georgia Budget and Policy Institute, a group leaning to the left, said that House Bill 1437 would raise taxes on about 10% of taxpayers and that only the top 20% of taxpayers would gain from the $620 million tax cut.
At the time, Democratic Rep. Matthew Wilson of Brookhaven said, “We are raising taxes on the working poor.” Wilson voted against the bill the first time it came up for a vote in the House, but he changed his mind when it came up again for a final vote on the last day of the session.
Republicans disagreed with the claim that the bill would make Georgians with low incomes pay more in taxes.
“We haven’t been able to find anyone who pays more,” the bill’s main backer, House Ways and Means Committee Chairman Shaw Blackmon, R-Bonaire, said on the House floor the day it was passed. Under this plan, “everyone pays nothing or less.”
Currently, Kemp is asking the General Assembly to speed up the tax cut by changing the state income tax rate from 5.39 percent in 2025 to 2024. Georgia can easily afford to speed up the tax cuts. Over the last few years, the state has saved $16 billion, with $11 billion in “undesignated funds.”
In early October, Kemp announced the plan. “Thanks to our conservative budgeting and strong state economy built on business-friendly policies, we are well-positioned to move the timeline up and put more money where it belongs—back into Georgians’ pockets,” he said. The General Assembly of 2024 will start meeting on January 8, 2024.