Report: Georgia should step up rate of income tax cuts
(The Center Square) — While Georgia officials report decreasing tax revenues, a leading policy group says the state should cut its tax rates further.
The Buckeye Institute, a Columbus, Ohio-based think tank that favors free-market public policy, says an incremental personal income tax cut to 3.99% by 2030 would generate even more jobs and economic growth. The group released its findings in a report titled “Next Steps for Georgia Tax Reform.”
“Competitive state tax codes have become increasingly important as high-skilled, high-income earners adapt to a post-pandemic ‘remote work’ environment,” the authors wrote. “Because many jobs may now be done from virtually anywhere in the country, workers are paying more attention to state and local tax regimes and the potential for local and regional economic growth.
“Ideally, to help maximize growth, tax codes should be simple and transparent with low rates and broad bases,” they added.
Specifically, The Buckeye Institute analysis found that increasing flat-tax rate reductions by an additional 0.2% each year should lead to $620 million in economic growth, $360 million in business investment, $170 million in consumer spending, and 2,000 new jobs in the first year.
Republican Gov. Brian Kemp signed House Bill 1437 into law in April 2022, setting the state’s tax level at a flat 5.49% rate for the tax year starting Jan. 1, 2024. Kemp is expected to sign HB 1015 to accelerate the state’s income tax cut from 5.75% to 5.39%, retroactive to the start of this year.
Additionally, HB 1015 decreases the rate by 0.1% annually starting Jan. 1, 2025, until it reaches 4.99%. However, the measure does contain some provisions that could delay the decrease, including if the governor’s revenue estimate for the next fiscal year is not at least 3% above the current fiscal year.
While Georgia’s net tax collections surpassed $2.3 billion in March, they decreased by 12.6% or $338.7 million compared to last year, when net tax collections totaled nearly $2.7 billion for the month. So far this fiscal year, net tax revenue totaled nearly $23.5 billion, a 0.5% or $115.6 million decrease from the same nine months of the previous fiscal year.
The report was authored by Rea S. Hederman Jr., executive director of the Economic Research Center and vice president of policy at The Buckeye Institute; Zachary D. Cady, an associate economist at The Buckeye Institute; and Trevor Lewis, an economic research analyst at The Buckeye Institute.
