Live long enough, and the world will bring you two things we have each been guaranteed: death and taxes, a loathsome pair 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 reduce or eliminate taxes, while their Liberal/Progressive counterparts detail the damage those tax and revenue reductions will inflict.
The Georgia General Assembly faces two major choices this year for reducing the tax burden on Georgians. The State Senate and 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 and single-family homes over six years.
Property and other ad valorem taxes are the primary funding sources for county governments and public school systems, along with sales taxes. Almost 60 percent of Georgia’s budget is dedicated to public education.
Meanwhile, income tax is the state’s largest single source of revenue, accounting for roughly 40 percent of its annual income.
For nearly a decade now, our General Assembly has consistently reduced Georgia’s income tax rate by a quarter or a half percentage each year, down from more than 7 percent to just over 5 percent. The governor’s and State House budget drafts call for further reduction to 4.99 percent, from the current 5.19 percent.
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 taxable threshold. The State Senate proposal would raise that household income exemption level to $100,000, making that amount tax-free income for each household.
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, and Rivian to Stanton Springs in Morgan County. 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 long since disappeared.
Many factors influence the rising prices of real estate and home ownership. Our home’s assessed value is now more than twice its purchase price of nearly two decades ago. However, if I were forced to rely solely on SSI income, as many Georgians on fixed incomes are, I likely would have to sell the home within three to five years — with property taxes pricing me out — before retiring the mortgage.
The Georgia HOME Act would double existing state homestead tax exemptions (currently 40 percent of a single-family home’s owner-occupied property value) every other year through 2032, moving toward their eventual elimination.
Local governments would be able to adjust sales taxes by up to 5 additional cents, as well as adjust fees to make up the funding difference.
Budget forecasters estimate the state’s reduced revenue to local governments and school districts would be roughly $5 billion per year.
Georgia’s income taxes generate more than $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.
The HOME Act will require a Constitutional Amendment and a six-year phase-in.
The funding plan that allows for incremental adjustments to support economic growth and enable visitors to Georgia to contribute more through increased sales taxes seems more broadly supported.
Our General Assembly has only one constitutionally required duty: to produce a balanced budget.
Prudent stewardship has earned Georgia one of the highest bond ratings in the nation. These revenue topics are real, serious, and potentially taxing matters. I have my preferences, but I hope our legislature collectively gets 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 may well more than earn their keep.