Live long enough and the world will bring you the two things we have each been guaranteed: Death and Taxes. This loathsome pair is nearly equally unpopular. The latter is a necessary evil to fund the many faces and services the government provides that people need or desire. This of course means that during election years we will often witness conservatives announce or embark on quests to remove or reduce taxes, while their liberal counterparts detail the damage those tax and revenue reductions will inflict.
The Georgia General Assembly faces two major choices for reducing the tax burden on Georgians. The State Senate and the Lieutenant Governor Burt Jones are championing the reduction and eventual elimination of the state’s personal income tax. State House Speaker Jon Burns and State House leadership, as well as Governor Brian Kemp’s proposed budgets would phase in relief for property taxes paid on homesteads, single-family homes, over six years. Property and other ad valorem taxes are the primary funding source for county governments and public school systems, along with sales taxes. The income tax is the state’s largest single source of revenue, accounting for roughly 40 percent of the state’s income.
Almost 60 percent of Georgia’s budget is dedicated to public education. County and municipal school systems primarily use property taxes to fund public education. State income taxes are paid on net income, not gross income. For lower-income households, several million already pay virtually no state income tax because their income falls below the minimum required for taxation.
To pay for the revenue loss, the State Senate bill would eliminate job creation tax credits which lured mega-projects, such as the Kia Automotive plant to LaGrange, the Hyundai plant to Bryan County and Ellabell, Ga., and Rivian to Stanton Springs in Morgan County, roughly an hour east of Atlanta. The pharmaceutical and technology industries have also followed those tax credits to Georgia, creating thousands of higher paying jobs, particularly in areas where job growth had otherwise long since disappeared.
The State House proposal, the Georgia HOME Act would double the existing state homestead tax exemptions (currently 40 percent of single-family home’s owner occupied property value) every other year through 2032, moving toward their eventual elimination. Local governments would have the ability to adjust sales taxes by up to five additional cents, as well as make fee adjustments to make up the funding difference. Budget forecasters estimate the state’s reduced revenue to local governments and school districts at roughly $5 billion per year.
Georgia’s income taxes generate over $16 billion annually, and the wealthy pay a disproportionate share of total income tax revenues. Noting that 60 percent of that would pass through to local school systems at current spending levels, those cuts would be in the range of $8-9 billion at the local level.
Our General Assembly has only one duty which is a Constitutional requirement. They must produce a balanced budget. Prudent stewardship has earned Georgia among the highest bond debt ratings in the nation. These revenue topics are real, serious and potentially taxing matters. I have my preferences, but hope our legislature collectively get the state’s revenue mix right without tanking our public school systems, Georgia’s robust economy, or ongoing job growth. We may not pay our legislators all that well, but this is an instance where they potentially more than earn their keep.
