State Rep. John Carson, R-Marietta, has introduced a bill into the Georgia House of Representatives that would lower state income taxes while moving toward a “consumption” model of taxation where sales taxes would provide a larger share of the state revenue.
“It’s your money, you keep more of it, you decide how to spend it,” Carson said, calling the current state tax system “broken.”
“This is about lower tax rates for all Georgians,” he added.
Carson said the bill would cut state income taxes for Georgia families by $2.5 billion annually, eliminating tiered income tax brackets and creating a “flat tax.”
Carson introduced House Bill 445 last week. The “More Take Home Pay Act” is designed to reform Georgia’s tax system by broadening the tax base, Carson said.
“Georgia’s tax system is long overdue for common-sense reform,” he said. “The More Take Home Pay Act empowers Georgians to make more personal choices with their hard-earned income, shifting the power away from the state and toward the kitchen table. Ultimately, this bill answers the need for an updated tax system that is flatter, fairer and puts our families first.”
Carson said the state ranks as the ninth worst state for income tax, according to the Atlanta Business Chronicle, and 36th in business tax climate.
“As a result, Georgia had the fourth-highest unemployment rate in the country as reported in December 2014,” Carson added.
Speaker of the House David Ralston, R-Blue Ridge, said he was looking forward to an open debate on Carson’s proposal.
“We need a tax structure that encourages families to save and businesses to invest so that Georgia can remain competitive with our neighboring states,” he said. “This bill will go through the committee process and, as always, constructive input is welcomed.”
Carson said he didn’t expect the bill to pass this year, but that it is a framework that legislators can refine, vet and strengthen in order to pass the measure in 2016.
“This is a huge shift for Georgia,” he said. “It’s a tax structure based on simplicity and fairness.”
The bill, Carson said, is the result of a comprehensive study of Georgia’s current tax system and how it impacts the average household. He said proposals in the bill, if passed and signed by the governor, would:
• cut the income tax burden on Georgia families by more than $2.5 billion;
• allow those households making $29,500 or more to pay less income tax, according to provisions in the bill;
• allow households bringing in $48,000 (the median Georgia household income) to keep $400 extra annually;
• reduce income tax rate to a flat 4 percent over a period of three years (2016: 4.5 percent, 2017: 4.25 percent, 2018: 4 percent). Currently, Georgians pay 6 percent of their income according to a tiered system;
• keep itemized deductions and personal exemptions while doing away with many special interest loopholes;
• raise the general state sales tax by 1 percent on Jan. 1, 2017, which will raise from the current 4 percent to 5 percent and include digitally delivered goods that are taxed in many other states;
• phase in a grocery state sales tax over a four-year period (2016: 0 percent, 2017: 3 percent, 2018: 4 percent, 2019: 5 percent) with each additional penny on the dollar contributing $130 million to the state budget. Food stamp purchases would be exempt from grocery tax;
• implement a flat communications service tax beginning on Jan. 1, 2016: state telecom: 5 percent, state cable: 5 percent, state direct broadcast satellite (DBS): 7 percent, local telecom: 1.25 percent; school telecom: .75 percent, and local cable: 2 percent; and
• increase the current cigarette excise tax over three years (2017: 45 cents; 2018: 55 cents, 2019: 65 cents).
The bill also would eliminate a jet fuel sales tax exemption for Delta airlines, according to news reports.
The bill is now in committee.