Today lawmakers are back in the Capitol for Day 28, known as Crossover Day. It is one of the General Assembly’s longest days, with voting planned until midnight. It is called Crossover Day, by the way, because it is the last day a bill must pass either the House or Senate to survive for the session.
Staff writer Baker Owens, in another article, lists important legislation to watch. Among all the bills being considered, though, taxpayers should cheer passage of Republican legislation that makes Georgia the latest state to adopt a flat tax.
The state House has already approved legislation to reduce income taxes by more than $1 billion. It combines six brackets into a single 5.25% rate beginning in 2024, scrapping the current top rate of 5.75%. This is helpful to taxpayers by ending most deductions— but a nice increase in the standard exemption will compensate. Single filers can exclude $12,000 of income, up from the current $2,700, while the exemption for joint filers rises to $24,000 from $7,400. And House Speaker David Ralston, R-Blue Ridge, estimates 95% of Georgians will pay less under the new plan.
One deduction exception is that filers age 65 and up will still be able to deduct $65,000 of retirement income, such as earnings from 401(k) distributions.
Legislators also reached a deal on the midyear budget, which includes a separate taxpayer dividend. Georgians will get refunds of $250 a person on their 2020 and 2021 filings at a total cost of $1.1 billion. The Wall Street Journal editorialized, however, that “the one-time relief is a political gimmick that won’t do much for economic growth and the money would have been better devoted to lowering tax rates. The tax proposal also doesn’t touch the current corporate tax rate of 5.7%, which is a missed opportunity.”
Anyhow, the newspaper notes “Georgia has fiscal room for tax cuts as a revenue surge is producing a budget surplus. Revenue in 2022 is on pace to exceed scheduled spending by $3.2 billion. Georgia’s economy has bounced back better than most since the pandemic shutdown. The state beat the national average for job growth, adding more than 210,000 in the past year. In January Georgia surpassed its pre-pandemic job level, joining a small club including Texas, Arizona, Idaho and Utah.”
Political insiders note this will resonate well for Republican legislative candidates who are championing tax cuts. And, of course, this is an election year when all General Assembly seats are on the November ballot.
A footnote: Insiders note that Georgia’s tax rate is still higher than it should be to compete with neighboring Florida, which is among the nation’s 10 fastest-growing states.
